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MPs Demand Clarity on Tax Incentives for Special Economic Zones

May 7, 2024 #Kenya News, #News
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Members of Parliament (MPs) have issued a one-month ultimatum to the State Department on Investment Promotion and the Kenya Revenue Authority (KRA) to reconcile data regarding tax incentives enjoyed by investors in Special Economic Zones (SEZs).

This directive came after discrepancies emerged in the information provided by the two entities during a session with the Departmental Committee on Finance and National Planning.

During the engagement, the Committee sought insights from Mr. Abubakar Hassan Abubakar, the Principal Secretary of the State Department for Investment Promotion, and Kenneth Chelule Langat, the Chief Executive Officer of the Special Economic Zones Authority (SEZA). The focus was on responding to inquiries raised by Mbeere North MP, Hon. Geoffrey Ruku, regarding the operations of SEZs.

Committee members expressed concerns over apparent loopholes in the regulatory framework governing certain entities operating within SEZs, potentially resulting in revenue loss for the country. Despite significant initial capital investments by the over 56 firms in the 37 gazetted SEZs, the impact of their output remains minimal.

Chairperson Hon. Kuria Kimani highlighted the Committee’s intention to verify the business activities of these entities, as tax exemptions may be granted without confirming their operational status.

In response, PS Abubakar clarified that many entities listed were still in the early stages and had yet to commence operations. However, Committee members, including Hon. Benjamin Langat, Hon. Joseph Munyoro, CPA Julius Rutto, Hon. Paul Biego, and Hon. (Dr.) John Ariko, sought further clarification on discrepancies in data, ongoing land transactions, and the imbalance in firm distribution among SEZs.

Acknowledging potential tax evasion loopholes, PS Abubakar and CEO Langat committed to collaborating with KRA to address these issues and proposed legislative interventions to strengthen SEZ regulatory frameworks.

The ultimatum underscores Parliament’s commitment to transparency and accountability in tax incentives within SEZs, aiming to ensure that benefits align with the intended developmental goals while safeguarding revenue interests.

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