Kenya is planning to give tax incentives to Indian companies investing here.
There will be a 10-year tax holiday for investors in Special Economic Zones and Export Processing Zones followed by 15 percent corporation tax for 10 years before reaching the 30 percent cap. There are other tax breaks as well, including VAT exemption.
This is excessively generous. There are 200 Indian companies operating in Kenya today without these goodies so Kenya is sufficiently attractive already. There are also thousands of companies in Kenya owned by indigenous Asians. Are they included or excluded from this deal?
It will be 20 years before these new Indian investors start paying their full share of tax. They can wind up and move on before the 30 years elapse.
The SEZs and EPZs may end up as industrial parks specialising in tax avoidance.
Government should create an enabling environment for all businesses operating in Kenya. It is unfair to increase taxes on existing businesses while giving tax breaks to foreign companies. Why not set corporation tax at 15 percent for all Kenyan companies? That would make Kenya attractive for both local and foreign investors.
Quote of the day: "I was one of the many horses pulling the wagon and couldn't escape left or right because of the will of the driver."
Adolf Eichmann
The Nazi bureaucrat's trial began in Jerusalem on April 11, 1961
