Companies operating in the Export Processing Zone but which are demand tax waivers to access the local market must confirm to the rules of ship out, a Cabinet Secretary said on Wednesday.
In his first visit to the EPZ at Athi River, Cabinet Secretary for Industrialisation and Enterprise Development Adan Mohamed said the state would not yield to pressure from manufacturers who want to access local market without paying 25 per cent tax imposed on traders who sell their products here.
“We cannot provide opportunities where people want to enjoy tax-free status in EPZ and also opportunities meant for people outside EPZ,” said Mr Mohamed. “If you do not want to export your products then you have no reason to be in EPZ.”
He, however, said the government was ready to address other challenges affecting the textile and clothing industry to boost what he says is a sector that can provide over 700,000 jobs in the next three years.
“We must take advantage of the global market through Agoa to aggressively grow the sector,” said Mr Mohammed. His office, he added, will work with the Agriculture ministry to ensure cotton growing is facilitated as a critical raw material for the sector.
At an engagement forum at the EPZ Complex Athi River yesterday morning, interested parties asked Mr Mohamed to intervene and scrap the taxes in order for their businesses to bloom.
“We are asking to be zero-rated. Otherwise most of us are ready to pull out,” challenged Nandi-based EMROK’s Tea chief executive Robert Keter in the half-day heated session.
EXEMPTED FROM SOME REGULATIONS
Through the special zones, companies are exempted from various regulations that usually apply to Kenya firms. They include exemption from payment of custom duties and value-added tax on imported raw materials, corporate taxes for the first 10 years from the date of first sale and that of stamp duty.
EPZ was established in the 1990s riding on the Agoa Act, an initiative by former US President Bill Clinton aimed at increasing trade between Kenya and America.
The EPZ is expected to be converted to Special Economic Zones under a new law yet to be debated in parliament.
Stakeholders want to expand their selling zone to local markets. This, according to market analysts, would disadvantage manufacturing companies in the country that do not enjoy special treatment.