Foreign tax credit
There is no tax credit for foreign tax paid on business income except as provided for by a DTT (if applicable) between Kenya and the other country. However, foreign tax paid may be deducted as an expense.
Businesses that used to claim investment deductions, such as hotels and manufacturers, have been impacted negatively by a recent change that has resulted in a reduction of the investment deduction allowances from 100% to 50% in the first year of use. The change in the legislation also removed the 150% investment deduction allowance that was granted to businesses to encourage them to invest in Nairobi, Mombasa, and Kisumu.
Export processing zone (EPZ)
Companies located in an approved EPZ, principally to export goods, are taxed at a 0% CIT rate for ten years from commencement and at a rate of 25% for the next ten years.
Special economic zones (SEZs)
SEZ enterprises are not required to register for VAT. The supply of goods or taxable services to an SEZ is subject to VAT at 0% (zero rated). See the Taxes on corporate income section for the CIT rates.