The Export Processing Zones (EPZ) in Kenya

  

Date Posted: 10/17/2012 9:06:32 AM

Posted By: moff J  Membership Level: Silver  Total Points: 485

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The Export Processing Zone is an area designated by the government for the sole purpose of manufacturing goods for export purposes only. In Kenya the EPZ is located in Athi River and the main industry which thrives in that area is the textile sector. Here the manufacturers produce goods for the sole purpose of exporting them.
Some of us may not know the sweeteners that the government provides for businesses in this zone. This article is meant to open your eyes and make you see the opportunities that are available for investing in the EPZ.

First, all exports are zero rated with respect to VAT. This means that a trader can actually sell their products at a more competitive price because there is no VAT charged on exports. Does that sound too good already? OK, I thought so. But wait, there are still more incentives. These include:
a) A 10 year tax holiday! Can you imagine a whole decade of taking your entire bounty home without the government taking even a dime from you? Well, it is possible if you set up a business at the EPZ.

b) A corporate tax rate of 25%. If you are a company, this is going to interest you. The corporation tax rate in Kenya is 30% for resident companies and 37.5% for non-resident companies. However, if the company has been set up in the EPZ, the government charges a reduced corporation tax rate of 25%. If you ask any financial manager how much the difference of 5% is worth you will be amazed.

c) Raw materials and machinery imported for the manufacture of exports are exempt from customs duty and VAT. Therefore, you get to obtain your resources at a lower cost which will boost the business’ profitability further.
d) This is now going to blow your mind away and

the next time you think of setting up a business you will think EPZ. Well, you get a 100% allowance (investment deduction) of the cost of building and machinery used for manufacturing purposes from the 11th Year of Operations. This effectively means that you can actually recoup your original cost of investment in the business through this allowance.

You see, I told you, it was going to blow your mind away. Therefore, the next time you think of setting up a business think EPZ and you can be certain that you will not be disappointed.
You however have to identify a good export market because products from the EPZ are strictly for export purposes and should therefore not be sold locally.

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