BY SILAS APOLLO
Start-up companies based in Kenya will from July this year be exempted from paying taxes on unrealised gains. The decision is part of the efforts by the government to promote investment in the country and make Kenya a hub for innovation.
Speaking during the America Chamber of Commerce regional summit at the Ole Sereni Hotel in Nairobi, President William Ruto said that the companies will be exempted from taxation effective July 1, 2023.
He argued that his administration wants to make Kenya an apex innovation centre by attracting investments from start-ups with the removal of hindrances that are preventing such businesses from realising their full potential.
“I have received complaints that we impose employee benefit tax on allocated shares to employees of start-up companies, even before any value is realised on these shares,” said President Ruto.
“The government will exempt start-up companies from paying taxes on such unrealised gains on employee-allocated shares starting 1st July this year,” he added.
The President said that the government was committed to promoting the best operating environment for business enterprises. This he said would be through the introduction of policies designed to make Kenya the most competitive investment destination across the continent.
“I am committed to make Kenya one of the most attractive places to do business. As you may know, Kenya has been ranked the third most attractive place to do business in Africa by the World Bank, under its ease of doing business scheme,” he said.
This comes at a time when the government is reviewing her Special Economic Zones and Export Processing Zones laws to remove impediments to attracting new local and foreign investments.
“The raft of amendments is under stakeholder consultations and will be in place by 1st July this year,” said Dr. Ruto, who spoke even as he announced the entry of additional business enterprises keen on expanding their operations in the country, including companies such Kentegra, Sanergy, Irrigation company sunculture, Hello Tractor, iProcure, and Victory farms. Others like Del Monte have also announced plans to expand their operations in the country in the coming months.
Dr Ruto said that Del Monte, the largest private sector employer in Kenya, has invested an additional $5.5 million in a new state-of-the-art fresh fruit packing facility, as part of its diversification programme.
The facility has a processing capacity of over 60,000 metric tons of fresh fruits and vegetables a year, and has created 280 new jobs. Del Monte’s plan is to source pineapples, avocados, mangoes and French beans from local growers in Murang’a, Kiambu, Machakos and other counties, engaging about 2,000 local farmers.
Kentegra, a US-Kenya company producing organic pyrethrum insecticide, is building a new pyrethrum refinery in Nakuru. The refinery is set to benefit about 90,000 farmers over the next five years.
Sanergy, a US investment and innovative company that turns waste into fertiliser, fuel and animal feed, will on the other hand expand their farm and organic waste collection to the benefit of 10,000 farmers. The expansion of the factory will also create about 300 jobs.
The government has also partnered with US solar irrigation company Sun Culture, to expand their pay-as-you-go model to make the technology accessible to more than 10,000 Kenyan farmers. The partnership is expected to increase farm yields and incomes by 40 per cent.
Hello Tractor on the other hand, is an ag-tech company that connects tractor owners and smallholder farmers through its tractor sharing application. They are scaling up operations throughout Kenya in partnership with John Deere. The investment is expected to create opportunities and additional services to smallholder farmers, such as climate-smart agriculture, operator training and agronomist services.
i-Procure, the largest agricultural supply chain platform in rural Africa, plans to scale up its distribution model to reach an additional one million smallholder farmers in Kenya with affordable agriculture inputs.
US company Victory Farms which produces high quality tilapia, has also announced plans to invest in the country, a move that will see them quadruple their production, creating thousands of jobs for women entrepreneurs, while supplying affordable, safe and high-quality fish protein to millions of Kenyan consumers.
President Ruto also noted that Kenya has one of the most developed financial services sectors in the continent and that the country is ripe for the establishment of an International Financial Centre in Nairobi to attract global financial players.
“To continue to reinforce this strong position, we are working with organisations such as the Financial Actions Task Force (FATF) to ensure Kenya fully complies with the relevant international standards on money laundering and terrorist financing activities, so as to make this International Financial Centre a reality,” he said.
He further noted that Kenya, the United States government and the American Chamber of Commerce had also launched a trilateral business dialogue, to address and resolve the challenges of U.S. investors and businesses in Kenya, in a bid to boost trade among the two nations.
“This new trilateral platform, scheduled to meet every three months, will serve as a key convening body to jointly tackle investment challenges and is a demonstration of the government’s commitment to hearing directly from the U.S. business community,” he said.
