The Newvasha Development Export Processing Zone (EPZ), as part of Kenya’s broader EPZ program, is opening up exciting avenues beyond traditional manufacturing. Under the Export Processing Zones Act, Cap 517, Laws of Kenya, a diverse range of service-based businesses are eligible to operate within these zones and receive substantial fiscal and non-fiscal incentives designed to promote export-oriented investment.
This article details the ideal service-based tenants for Newvasha EPZ and how the Kenyan EPZ Act extends the same powerful benefits to these sectors as it does to manufacturing enterprises.
I. Ideal Service-Based Clients for the Newvasha EPZ
The EPZ program classifies service-based businesses into two main categories for licensing: EPZ Enterprise Service Licenses (for export-oriented services) and EPZ Business Service Permits (BSP) (for services supporting other EPZ companies).
1. Business Process Outsourcing (BPO) & ICT
- Example Services: Call Centres, Data Processing, Software Development, Remote Technical Support, Cloud Computing Services.
- Strategic Fit for Newvasha EPZ: High potential. Leverages Kenya’s tech-savvy, multilingual workforce and the zone’s superior infrastructure and reliable power supply. The services are inherently exportable.
2. Export-Related Service Activities
- Example Services: Export Brokerage, Repair Services, Testing and Quality Certification (e.g., for agro-products), Consulting (excluding financial services).
- Strategic Fit for Naivasha EPZ: Directly supports the flow of goods and quality assurance for other exporters in Naivasha and beyond, making it a critical value-chain partner.
3. Film & Media Production
- Example Services: Post-production services, Animation, Digital Content Creation for international markets.
- Strategic Fit for Naivasha EPZ: Utilizes digital infrastructure to export high-value creative services globally.
II. On-Site Support (EPZ Business Service Permit – BSP)
Firms that receive a Business Service Permit (BSP) provide essential support services to the EPZ Enterprises located within the zone. While the fiscal incentives (like the corporate tax holiday) may not apply in the same way as an Enterprise License, they benefit from a streamlined operating environment and other non-fiscal advantages.
Service Category Examples of BSP-Eligible Businesses
Logistics & Maintenance Clearing and Forwarding, Transportation Services (freight and passenger), Installation, Repair, and Maintenance Services (for machinery/equipment)
Essential Services Catering and Restaurant Services, Commercial Banking (branch/liaison), Staff Recruitment and Payroll Services, Medical and Related Services.
Professional Services Business Consultancy (Marketing, Training, Legal), Insurance Services, Security Services.
The Power of the EPZ Act: Benefits for Service-Based Clients
Under the Export Processing Zones Act, Cap 517, the Kenyan government has ensured that qualified service enterprises receive the same comprehensive package of incentives as their manufacturing counterparts. These incentives drastically reduce operating costs, streamline customs, and de-risk foreign exchange exposure.
1. Fiscal Incentives (EPZ Service Enterprise License Holders)
- Corporate Tax Holiday: A 10-year 100% Corporate Income Tax holiday, followed by a perpetual 25% tax rate thereafter.
- Withholding Tax Exemption: A 10-year 100% Withholding Tax holiday on dividends and other remittances to non-resident owners or partners.
- Duty & VAT Exemptions (Perpetual): Perpetual exemption from VAT and Customs Import Duty on imported inputs, machinery, equipment, building materials, and office equipment used directly in the service provision.
- VAT on Local Purchases (Zero-rated): Local purchases of goods and services supplied by companies in the Kenyan customs territory to the EPZ enterprise are zero-rated for VAT.
- Investment Deduction: 100% Investment Deduction on new investment in buildings and machinery, spread over 20 years.
- Stamp Duty Exemption: Perpetual exemption from Stamp Duty on legal instruments.
2. Physical and Procedural Incentives
- One-Stop Shop: EPZA acts as a single point of contact, minimizing bureaucracy and facilitating rapid project approval and licensing (usually within 20 working days).
- Liberalized Foreign Exchange: No exchange controls, with a liberalized foreign exchange regime allowing easy repatriation of capital and profits, and access to foreign currency accounts.
- Superior Infrastructure: Operating within designated zones like Naivasha ensures access to high-quality, serviced infrastructure, including all-weather roads, reliable utilities (power, water, sewerage), and 24-hour security.
- Onsite Customs: Permanent presence of Customs staff facilitates on-site customs documentation and inspection, leading to green channel port and customs clearance.
Conclusion: Why Newvasha EPZ is the Right Fit
The strategic location of the Naivasha EPZ, combined with the comprehensive benefits guaranteed by the EPZ Act, makes it an excellent choice for export-oriented service firms.
For BPO/ICT and Export-Related Services, the tax-free environment for ten years, coupled with the ability to repatriate profits easily, provides an unparalleled competitive edge in the global service market. For support services under the Business Service Permit, the streamlined operations and proximity to a concentrated pool of high-demand EPZ enterprises ensure a thriving, captive market.
The EPZ Act of Kenya successfully promotes service exports as a critical component of national economic growth, ensuring that service-based tenants in Naivasha receive the same strong foundation for international success.
Ready to capitalize on the Newvasha Development EPZ Advantage?
Contact our us to schedule a strategic consultation and see why our location is your next competitive edge.
Email: info@newvashaepz.com
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