Human Resources

Written on 10 June 2022. Posted in Investment Guide

Each EAC Partner State has well-developed public and private education institutions at primary, secondary and tertiary levels. All the EAC Partner States are taking measures to increase support to the sector. Specialised Regional Centres of Excellence are being established across the EAC.

Workers and their employers must contribute to provident funds managed by the Governments on behalf of the workers in all the EAC Partner States. Each country has its own labour laws and regulations, which stipulate the terms of employment such as compensation, maximum working hours, vacation, leave, the employee complaint process, night and holiday work, and medical care. Wages are paid in the manner specified in the written contract of employment, which could be on a daily, weekly or monthly basis.

The EAC region has sufficient human capital to support new and existing businesses in the EAC with high quality, innovative and skilled human resources at all levels.

Within the EAC, international Universities of high repute have set up campuses. Also, a good number of Universities in EAC are ranked among the top 20 and top 1000 in Africa and the world respectively.

The EAC has Technical and Vocational Education and Training (TVET) institutions that are producing graduates with vocational skills and competencies at certificate and diploma levels.

Furthermore, the EAC is a Common Higher Education Area whose higher education is internationally competitive and attractive, ensures easy mobility and employability of graduates.

The Inter-University Council for East Africa (IUCEA), an institution of the EAC, coordinates the harmonisation of higher education and training systems in East Africa, facilitates their strategic development, and promotes internationally comparable standards and systems to ensure high quality human capital development necessary for developing and implementing investments. The IUCEA membership currently stands at 133 public and private Universities and University Colleges distributed within the six (6) East African Countries.

Infrastructure and Utilities

Written on 10 June 2022. Posted in Investment Guide

Power supply and energy

Power generation in the region is largely hydro- based. In 2019, 14.8 US cents was the average cost for one kilowatt hour (kWh) of electricity for East African domestic and industrial consumers. Hydro-power as an energy source is excelling in the region but suffers from a lack of distribution infrastructure. Kenya has managed to lower energy costs to consumers due to long-term investments in developing its geothermal energy production. This stable source of renewable energy gives Kenyan consumers more consistent access to electricity. The EAC countries have high solar energy potential. A significant debate involves land use for solar versus use of land for agricultural or mining purposes. Biomass energy is another option that is explored.

Water and sanitation

One basic goal of the EAC Governments is to ensure access to safe drinking water within a reasonable distance for their citizens. Public water supply is available to the majority of the population in urban areas throughout the EAC region. However, domestic and industrial waste management has remained a serious environmental challenge in most urban areas in the EAC Partner States. 

Telecommunications

The telecommunications sector is liberalised in all the Partner States. The communications infrastructure is modernised to meet business needs in the region. There is sufficient coverage of mobile network across the EAC. Rwanda, Kenya, South Sudan and Uganda are in a One-Area-Network that has enabled easy communication across the EAC Partner States where the roaming costs have been harmonised and calls across these Partner States are treated as local calls. Tanzania and Burundi are in the process of joining the One-Area-Network. The telecommunications sector in each Partner State is regulated by a government agency established by an Act of Parliament or a Presidential decree. However, South Sudan currently has no telecommunications regulator.

Telecommunication regulators in the EAC Partner states

The Road network

There are two (2) transit corridors that facilitate import and export activities in the EAC and neighbouring countries:

• The Northern Corridor (1,700 km long) commencing from the port of Mombasa and serves Kenya, Uganda, Rwanda, Burundi and Eastern DRC.
• The Central Corridor (1,300 km long) begins at the port of Dar-es-Salaam and serves Tanzania, Zambia, Rwanda, Burundi, Uganda and Eastern DRC.

There are also five (5) major transport corridors in the EAC:

• Mombasa - Malaba - Kigali - Bujumbura
• Dar es Salaam - Rusumo with branches to Kigali, Bujumbura and Masaka
• Biharamulo - Sirari - Lodwar - Lokichogio
• Nyakanazi - Kasulu - Tunduma with a branch to Bujumbura
• Tunduma - Dodoma - Namanga - Isiolo - Moyale

These main transport corridors are in good condition, and with the Road Fund boards and Road Agencies established in the Partner States, these transport corridors remain a priority for maintenance. The majority of feeder roads in each Partner State are also well maintained to support business at both national and regional levels.

Air transport

EAC has ten (10) international airports. There are other airports and airstrips spread across the EAC Partner States. With the exception of Burundi and South Sudan, the rest of the partner states have national airlines.

International Airports and National Carriers within the EAC

Several airlines fly into and out of these international airports within the EAC. It is very easy to travel by air within EAC Partner States and beyond.

Railways

The railway system is more developed in Kenya and Tanzania with the recent construction of Standard Gauge Railway (SGR) in both countries in a phased manner. Some SGR routes are still under construction and others are planned for construction. The leaders of Kenya, Rwanda and Uganda signed a tripartite agreement for the development and operation of the SGR between Mombasa-Kampala-Kigali, with branch lines to Kisumu (Kenya) and Pakwach/Gulu-Nimule (Uganda).

Convinced of the benefits of the high-speed train, South Sudan also acceded to the agreement in May 2014 to extend the line to Juba. Despite the delays in execution of the project due to funding challenges, the railway project is set to increase the region’s competitiveness and lower the cost of doing business.

Water ways and ports

Despite the existence of large water masses, especially the freshwater lakes, in the region, waterways remain underutilized. The key water way services are on Lake Victoria, Lake Tanganyika, and Lake Nyasa.  The services include cargo freight and passenger transport services on Lake Victoria (linking Tanzania, Kenya and Uganda), Lake Tanganyika (linking Tanzania, Burundi, the Democratic Republic of the Congo and Zambia), and Lake Nyasa (linking Tanzania, Malawi and Mozambique). 

Seaports in the region consist of the ports of Mombasa in Kenya, and Dar es Salaam, Mtwara, and Tanga in Tanzania whereas Burundi, Rwanda, South Sudan and Uganda are landlocked. The ports have been modernised including dredging to handle world-class freighters. This has led to increased cargo handling. The two major ports of Dar es Salaam and Mombasa serve not only the EAC but also other landlocked countries, including Zambia and the Democratic Republic of the Congo.

EAC Investment

Written on 10 June 2022. Posted in Investment Guide

EAC Partner States are committed to improving their investment environment with targeted investments into infrastructure, industrial development, and oil production and refining, as well as investment in renewable energy, to reduce the huge import bill and dependence on fossil fuels.

EAC Partner States continue to promote investment opportunities to attract Foreign Direct Investments (FDIs) into the various priority sectors. FDIs inflows to the EAC have previously been concentrated in the manufacturing, construction, and services sectors. China and India continue to be the major sources of FDI to EAC.

_{Source: UNCTAD (2020) World Investment Report. Figures in red are estimates.}

Kenya, Rwanda, Tanzania and Uganda have been experiencing a steady increase in FDI since 2017. Besides FDIs, the EAC is keen to promote intra-EAC investments, by implementing policies that enhance domestic resource mobilization, including improved tax administration, financial sector development, financial innovation and curbing capital flight by stopping illicit financial flows from EAC.

EAC Trade

Written on 10 June 2022. Posted in Investment Guide

The economies of the EAC depend on export of agricultural commodities, manufactured products, and services such as tourism, ICT and financial services. To a large extent trade between the Partner States as well as with the rest of the world is mainly on primary commodities though there is an increase in the trade of finished goods.

The composition of EAC trade is dominated by agricultural commodities, namely coffee, tobacco, cotton, rice, maize, wheat and tea.

Manufactured goods such as cement, petroleum, textiles, sugar, confectionery, beer, salt fats and oils, steel and steel products, paper, plastics and pharmaceuticals are also traded across the region.

EAC intra-regional imports grew by 13.9% to USD 2.8 billion from USD 2.5 billion in 2017. Intra-regional exports grew by 5.6% to USD 3.2 billion in 2018 from USD 2.9% in 2017.

The growth in intra-regional trade was attributed to increased production of agricultural commodities leading to higher exports that are traded among the Partner States especially maize, rice and dairy products; elimination of Non-Tariff Barriers; as well as increased intra-EAC trade in intermediate products like cold rolled iron and clinker (EAC, 2018).

Uganda Standard Incentives for Investors

Written on 30 May 2022. Posted in Investment Guide

The tax incentives / exemptions available to investors in Uganda are comprehensively provided in ‘’A Guide on Tax Incentives / Exemptions available to the Ugandan Investors, 2019’’ published by Uganda Revenue Authority.

1. Investment Incentives
   

   A foreign investor in Uganda is required to obtain an investment licence from the UIA. A foreign investor qualifies for incentives under the ICA where the investor makes a capital investment or an equivalent in capital goods worth at least US$ 500,000 by way of capital invested. The Second Schedule to the ICA contains the priority investment areas for which additional benefits may be granted.The benefits that can be negotiated by or granted to the holder of an investment certificate are as follows:
   1. concessional rates of import duty for an investor who is importing any plant, machinery, equipment, vehicles or construction materials for an investment project;
   2. exemption from payment of import duty on one motor vehicle for personal use, personal and household effects which the person owned and used outside the East African Partner State for at least twelve months. Such person must show that he is changing residence from a place outside the East African Partner State to a place within the East African Partner State;
   3. incentives available generally for start-up businesses under custom laws, the Income Tax Act (Cap 340) (ITA) and the Value-Added Tax Act (Cap 349); and
   4. drawback of duties payable on imported inputs used in producing goods for export as provided in the laws imposing such duties and taxes.

2. Income Tax
   

   Resident companies and businesses are taxed on worldwide income. Non-residents are taxed only on Uganda- source income. A company or similar corporate entity is resident in Uganda if it is incorporated or formed under Ugandan law; management and control of its affairs are exercised in Uganda; or the majority of its operations are carried out in Uganda during the year of income. An individual is a tax resident if domiciled in Uganda, spends at least 183 days in any 12-month period, or is present for an average of at least 122 days during 3 consecutive tax years, or if that individual is an employee or official of the Government of Uganda posted abroad during that year of income.Uganda’s corporate tax rate is 30% for resident companies and branches of foreign companies. The rate for mining companies ranges. It is either 25% or 45% depending on the chargeable income.

3. Withholding Tax
   

   Withholding tax of 15% is imposed on every non-resident person who derives any dividends, rent, natural resource payment, interest, royalties and management fees from sources in Uganda. Withholding tax of 15% is imposed on a resident person deriving dividends and interest in Uganda. Withholding tax on interest payable to resident persons does not apply to:
   1. interest paid by a natural person;
   2. interest paid by a company to an associated company;
   3. interest paid which is exempt from tax in the hands of the recipient; and
   4. interest other than interest from governmental securities paid to a financial institution.

4. Capital Gains Tax
   

   Residents and non-residents in respect of a Ugandan branch are liable to income tax on gains arising from disposal of their non-depreciable asset (including a sale of shares in a private company). Those gains are included in gross income and treated as normal business income subject to income tax at the rate of 30%.

5. Other Tax
   

   Value-added Tax (VAT) is chargeable on taxable supplies of goods and services in Uganda and the import of certain goods. The standard rate of VAT is 18%. However, a zero rate applies to supplies including agricultural produce in an unprocessed state, financial services and insurance services limited to health insurance services, micro-insurance services, re-insurance services and life insurance services.

6. Transfer Pricing and Thin Capitalisation
   

   The Income Tax (Transfer Pricing) Regulations, 2011, applies to a controlled transaction if a person who is a party to the transaction is located in and is subject to tax in Uganda and the other person who is part to the transaction is located in or outside Uganda. “Controlled Transaction” means a transaction between associates. The Regulations require that transactions between associated persons be conducted in accordance with the arm’s length principle. The Income Tax Act, (Cap 340) contains provisions on thin capitalisation of foreign controlled resident companies. Thin capitalization arises where a company, incorporated in Uganda is controlled by a non- resident person i.e. the foreign controller and has a foreign debt to foreign equity ratio in excess of 1:1 at any time during a year of income. In this case, a deduction is disallowed for the interest paid by the company during that year on that part of the debt which exceeds the 1:1 ratio (financial institutions are exempt from this legislation).

7. Stamp Duty on a Transfer
   

   Stamp duty on any transfer is charged at a rate of 1% of the total value of the transfer. It is charged at nominal rates on a variety of financial instruments and transactions, for example, guarantees, loan agreements, deeds of assignment and novation deeds.

8. Double Tax Treaty with Mauritius
   

   Uganda has a double tax agreement (DTA) with Mauritius. Under the DTA, dividends, interest and royalties paid to a person resident in Uganda by a Mauritian company are taxed at a rate of 10%.

9. Fiscal Incentives under Uganda Free Zones Scheme
   

   Exemption from taxes and duties on all Export Processing Zone imported inputs that are for the exclusive use in the development and production output of the business enterprise (raw materials, plant and machinery, spare parts and intermediate goods).
   1. Exemption from all taxes, levies and rates on exports from the Free Zones.
   2. 10-year tax holiday for a Developer of Free Zone whose investment capital is at least US$ 50 million.
   3. 10-year tax holiday for an Operator in a Free Zone whose investment capital is at least US$ 10 million (foreigners) or US$ 2 Million (EAC).
   4. Exemption from tax on plant and machinery used in the Free Zones for 5 years and 1 day upon disposal.
   5. Nil Excise duty on construction materials for development of free zones by a developer US$ 50 million (Foreigners) and US$ 10 million (EAC). Operators -US$ 10 million (foreigners) and US$ 1 million (EAC).
   6. Stamp duty exemption on lease of land, increase of share capital, transfer of land: Developers US$ 50 million (Foreigners) and US$ 10 million (Ugandan). Operators -US$ 10 million (foreigners) and US$ 1 million (EAC).
   7. VAT Exception on feasibility studies, design construction services, construction materials and earth moving equipment and machinery for entire duration of the development. The investment must be at least US$ 50 million.
   8. Exemption from Tax on income from Agro-processing.
   9. Unrestricted remittance of Profit after tax

10. Non-Fiscal Incentives under Uganda Free Zones Scheme

    1. Dedicated Business facilitation and aftercare services.
    2. Economies of scale resulting from a centralized business structure with access to many clients;
    3. Enhanced Technology uptake;
    4. Centralized Customs inspection of buildings, premises, vehicles, vessels entering and leaving the Free Zone.

United Republic of Tanzania Standard Incentives for Investors

Written on 30 May 2022. Posted in Investment Guide

The Tanzania Investment Act 1997 defines “incentives” as tax reliefs and concessional tax rates which may be accessed by an investor under the Income Tax Act, the Customs Tariff Act, the Tanzania Revenue Authority Act, the Value-Added Act, and any other law for the time being in force, and includes additional benefits that may be accessed by an investor under sections 19 and 20 of the Tanzania Investment Act 1997.

1. Fiscal and Non-Fiscal Incentives offered to Investors

   1. Access to various services related to permits, licenses and approvals in the TIC One Stop Facilitation Centre.
   2. The recognition of private property and protection against any non-commercial risks. Tanzania is an active member of the World Bank Foreign Investment Insurance wing, MIGA (Multilateral Investment Guarantees Agency). Likewise, Tanzania is a member of The International Centre for Settlement of Investment Disputes (ICSID) also a body affiliated to the World Bank.
   3. Zero percent (0%) Import Duty on Project Capital Goods, Computers and Computer Accessories, Raw Materials and Replacement Parts for Agriculture, Animal Husbandry and Fishing, Human and Livestock Pharmaceuticals and Medicaments, Motor Vehicle in Completely Knocked down (CKD) form and inputs for Manufacturing Pharmaceutical Products.
   4. Ten percent (10%) - Import Duty for Semi-processed/semi-finished goods).
   5. 100% capital expenditure to Agricultural sector.
   6. The Income Tax Laws allows 50% Capital allowances in the first year of use for Plant and Machinery used in manufacturing processes and fixed in a factory, fish farming; or providing services to tourists and in a hotel. Thereafter, wear and tear rates apply to the remainder as below:
      1. VAT Deferment granted on project capital Goods such as Plant & Machinery. However, the persons have to carry on an economic activity, keep proper VAT records and file returns, has no Tax outstanding and VAT payable in respect of each unit of the Capital goods is 20 million Shillings or above.

2. Strategic and Special Strategic Investment Status

   1. Additional fiscal incentives to strategic investors who meet criteria under section 20 of the Tanzania Investment Act, 1997 as follows:
      1. If locally owned, the minimum investment capital for the proposed project is not to be less than Tanzanian Shillings equivalent to twenty million US dollars (USD 20,000,000 and If wholly owned by a foreign investor or is a joint venture, the minimum investment capital for the proposed project is not less than Tanzanian Shillings equivalent to Fifty Million US dollars (USD 50,000,000);
      2. The project should contribute significantly in creation of employment opportunities
      3. New and innovative technology to be introduced by the prospective strategic investment project
      4. The project should contribute to capacity to produce for export and contribute to foreign exchange earnings
      5. The investment should be in a special geographical area.
   2. Special strategic investment status. The government may identify projects and grant special strategic investment status, if the proposed projects meet the following criteria:
      1. A minimum of investment capital of not less than the equivalent in Tanzanian Shillings of three hundred million US dollars (USD 300,000,000)
      2. Investment capital transaction is undertaken through registered local financial and insurance institutions
      3. At least one thousand five hundred direct employment is created with satisfactory number of senior positions in the projects that do not require high and sophisticated technology; and
      4. Capacity to significantly generate foreign exchange earnings, produce significant important substitution of goods or supply of important facilities necessary for development in the socio-economic or financial sector.
   3. Upon grant of a strategic or special strategic investment status to a project, the Minister for Finance shall propose to the National Investment Steering Committee additional specific fiscal incentives
   4. Where the National Investment Steering Committee approves additional specific fiscal incentives, the Minister for Finance shall confer such additional fiscal incentive as approved by the National Investment Committee under an order published in the Gazette.
   5. The National Investment Steering Committee may review every project conferred additional specific fiscal incentives in respect of compliance of incentives granted and advise the Government on whether or not to continue issuing the incentives.

3. EAC Customs Management Act provides 0% import duty on Hotel Equipment’s
   

   Any of the following goods engraved or printed or marked with the hotel logo imported by a licensed hotel for its use: Washing machines; Kitchen Ware; Cookers; Fridges and freezers; Air Conditioning Systems; Cutlery; Televisions; Carpets; Furniture; Linen and Curtains; as well as Gymnasium equipment

4. Import Duty Drawback

   1. Import Duty draw back on raw materials used to produce goods for exports and deemed exports. Deemed exports cover locally produced or manufactured goods, which are sold to foreign agencies or entities operating in Tanzania, which are exempt from payment of import duties.
   2. Zero-rated VAT on exports.
   3. The right to transfer outside the country 100% of foreign exchange earned, profits and capital.
   4. Automatic permit of employing 5 foreign nationals on the project holding Certificates of Incentives.

5. Land for Investment in Mainland Tanzania.

Through the land act, foreign investors can obtain land for investment through Tanzania Investment Centre (TIC), where a ‘’Derivative Right’’ is granted while Domestic investors own land directly through the certificate of right of occupancy. TIC has established a land bank registry where land suitable for various investment sectors including manufacturing and agriculture has been identified, surveyed and availed with key infrastructure.

South Sudan Standard Incentives for Investors

Written on 30 May 2022. Posted in Investment Guide

The grant of Incentives to Investors in South Sudan is governed by the South Sudan Tax System (according to Taxation Act 2009), and Benefits and Incentives for Investors (according to Investment Promotion Act 2009.

When establishing business in South Sudan, one is required to obtain a tax identification number (TIN). The TIN will be provided the time of registration/incorporation of the business name. The significant milestone in tax policy for Republic of South Sudan was passage of Taxation Act 2009 that provided for sound tax policy framework; a strong basis for tax administration, and a modern, easily administrated tax law.

1. Business Personal Income Tax

2.   Business Profits Tax

 Dividends, interest and royalties subject to a 10% withholding tax. The Act is very investor-friendly including:

• A very low and simple rate structure
• And liberal business deduction and depreciation systems: depreciation over 10 years for building; 3 years for equipment including vehicles and; 4 years for all other assets.

3. New Tax System

The Act is designed as a package and is one of the few comprehensive tax laws in Africa which encompasses:

• Personal income tax marginal rate is 0, 10, and 15%
• Excise duties range from 5 to20%
• Business profile tax is 10% on small sized businesses and 15% on medium sized businesses

Taxation in South Sudan takes place at the Republic of South Sudan level, State level and County/Payam/Boma levels. Taxes are payable to the Directorate of Taxation.

4. Excise Tax

Excise tax is levied on goods produced in South Sudan; the import excisable goods into South Sudan; and the provision of excisable services in South Sudan. The following table provides a detailed list of excisable goods and their corresponding excise tax. 

5. Tax Concessions and Incentives Regime

The Government of the Republic of South Sudan has designated the following sectors as priority for Investment, and investors in these sectors are entitled to benefits and incentives:

1. Agriculture and Agribusiness
2. Physical infrastructure
3. Social infrastructure
4. Mining, quarrying, energy and electricity, petroleum and gas industries
5. Prospecting of natural resources for economic use
6. Forestry
7. Medium to heavy manufacturing industries
8. Transport, telecommunications, print and electronic media, and ICT
9. Commercial banking, insurance, property management, and financial institutions
10. Pharmaceuticals, chemicals, and medicinal and surgical industries
11. Tourism and hotel industry development 

Investors in the aforementioned sectors enjoy the following incentives:

• Duty exemptions: agricultural import-tools, equipment, machinery and tractors, pharmaceutical, animal feeds, seeds – for boosting food and cash crops productions are exempt from any duties and taxes for a period that shall be determined by law.
• Tax Incentive: these include capital allowances ranging from 20% to 100%, deductible annual allowances ranging from 20% to 40% and other depreciation allowances ranging from 8% to20%.
• Special Incentive: special incentives may be granted by Board of Directors of South Sudan Investment Authority to investments in strategic or transformational sectors. These special incentives are only available on special applications by investments in areas designated as Strategic or Transformational.

Tax incentives and duties exemptions are requested through an application to the Ministry of Finance and Planning which is obtained and administered by South Sudan Investment Authority, the Government mandated agency to regulate, promote investment opportunities in South Sudan, Region and in the World.

Rwanda Standard Incentives for Investors

Written on 30 May 2022. Posted in Investment Guide

1. Preferential corporate income tax rate of zero percent (0%)
   

   An international company which has its headquarters or regional office in Rwanda is entitled to a preferential corporate income tax rate of zero per cent (0%) if it fulfils the following requirements:
   1. to invest the equivalent of at least ten million United States Dollars (USD 10,000,000), in both tangible or intangible assets, in Rwanda;
   2. to provide employment and training to Rwandans;
   3. to conduct international financial transactions equivalent to at least five million United States Dollars (USD 5,000,000) a year for commercial operations through a licensed commercial bank in Rwanda;
   4. to be well established in the sector within which it operates;
   5. to use the equivalent of at least two million United States Dollars (USD 2,000,000) per year in Rwanda;
   6. to set up actual and effective administration and coordination of operations in Rwanda and perform at least three (3) of the following services in Rwanda:
      1. procurement of raw materials, components or finished products;
      2. market control and sales promotion planning;
      3. information and data management services;
      4. treasury management services;
      5. research and development work;
      6. training and personnel management.

2. Preferential corporate income tax rate of fifteen percent (15%)
   

   A preferential corporate income tax rate of fifteen percent (15%) is accorded to:
   1. A registered investor, exporting at least fifty percent (50%) of turnover of goods and services produced in Rwanda, including business processing outsourcing. This incentive excludes unprocessed minerals, tea and coffee without value addition according to the provisions of this Law.
   2. A registered investor undertaking one of the following operations: energy generation, transmission and distribution from peat, solar, geothermal, hydro, biomass, methane and wind. This incentive excludes an investor having an engineering procurement contract executed on behalf of the Government of Rwanda;
   3. A registered investor in the sector of transport of goods and related activities whose business is operating a fleet of at least five (5) trucks registered in the investor’s name, each with a capacity of at least twenty (20) tons.
   4. A registered investor operating in mass transportation of passengers and goods with a fleet of at least ten (10) buses registered in the investor’s name, each with a capacity of at least twenty-five (25) seats;
   5. A registered investor in the Information and Communications Technology (ICT) Sector with an investment involving one of the following activities: service, manufacturing or assembly. This incentive excludes ICT retail and wholesale trade as well as ICT repair industries and telecommunications;
   6. A registered investor operating in the following financial services: global business activities, private equity funds, fund management, wealth management; mutual funds, collective investment schemes, captive insurance schemes, venture capital, and asset backed securities. This incentive excludes locally oriented fund and wealth management, retail banking and insurance activities.
   7. An investor registered in building low-cost housing and upon fulfilling the criteria provided under the instructions of the Minister in charge of housing.
   8. An investor registered in any other priority economic sector as may be determined by an Order of the Minister in charge of finance.

3. Corporate income tax holiday of up to seven (7) years
   

   A registered investor investing an equivalent of at least fifty million United States Dollars (USD 50,000,000) and contributing at least thirty percent (30%) of this investment in form of equity in the sectors specified below is entitled to a maximum of seven (7) years corporate income tax holiday:
   1. Energy projects producing at least twenty-five megawatts (25 MW). This incentive excludes an investor having an engineering procurement contract executed on behalf of the Government of Rwanda and fuel produced energy;
   2. Manufacturing;
   3. Tourism;
   4. Health;
   5. Information and Communication Technology (ICT) Sector with an investment involving manufacturing, assembly and service. This incentive excludes communication, ICT retail and wholesale trade as well as ICT repair companies or enterprises and Telecommunications;
   6. Export related investment projects;
   7. An investor registered in another priority economic sector as may be determined by an Order of the Minister in charge of finance.

4. Corporate income tax holiday of up to five (5) years
   

   Microfinance institutions approved by competent authorities are entitled to a tax holiday of a period of five (5) years from the time of their approval. However, this period may be renewed upon fulfilling conditions prescribed in the Order of the Minister in charge of finance.

5. Exemption of customs tax for products used in Export Processing Zones
   

   A registered investor investing in products used in Export Processing Zones is exempted from customs taxes and duties according to the provisions of customs rules and regulations of the East African Community.

6. Exemption of Capital Gains Tax
   

   A registered investor does not pay capital gains tax. However, income derived from the sale of a commercial immovable property shall be included in the taxable income of the investor.

7. Exemption of Value Added tax on Raw materials and Machinery on Manufacturing and Mining industries

upon approval of the list of these materials by Ministry of Finance and Economic Planning.

8. Value Added Tax refund
   

   The refund of the Value-Added Tax paid by investors shall be made within a period not exceeding fifteen (15) days upon receipt of the relevant documents by the tax administration authority.

9. Accelerated depreciation
   

   A registered investor is entitled to a flat accelerated depreciation rate of fifty percent (50%) for the first year for new or used assets if he/she meets the following criteria:
   1. Invest in business assets worth at least fifty thousand US dollars (USD 50,000) each;
   2. Operate in at least one of the sectors below and meet the requirements: export projects; manufacturing; telecommunications; agro processing; education; health; transport excluding passenger vehicles with less than nine (9) people seating capacity; tourism investments worth at least one million eight hundred thousand United States Dollars (USD 1, 800,000); construction projects worth at least one million eight hundred thousand United States dollars (USD 1,800,000); and any other sectors provided the investment is worth at least one hundred thousand United States dollars (USD100,000)
   3. Meet the obligations defined below:
      1. keep the assets for at least three (3) years after benefiting from the accelerated depreciation;
      2. inform the Commissioner General of the Rwanda Revenue Authority of the disposal of the business assets in case such disposal is made before three (3) years.

10. Carry forward of losses in income tax law
    

    If the investment allowance (accelerated Depreciation) results into the company making losses, then the loss and other verified business losses are carried forward for next 5 fiscal years.

11. Immigration incentives
    

    A registered investor and his/her dependents shall be issued with a residence permit in accordance with relevant laws. A registered investor who invests an equivalent of at least two hundred fifty thousand United States Dollars (USD 250,000) may recruit three (3) foreign employees without necessarily demonstrating that their skills are lacking or insufficient on the labour market in Rwanda.

Kenya Standard Incentives for Investors

Written on 30 May 2022. Posted in Investment Guide

Investment incentives, both fiscal and non-fiscal, are available in Kenya. The Kenya Revenue Authority implements the issuance of the fiscal (tax) incentives in collaboration with other Authorities e.g. Capital Market Authority, Export Processing Zones Authority (for issuance of the EPZ incentives) among others as provided under the Income Tax Act, Laws of Kenya. The tax incentives are mainly in form of capital deductions. These deductions are made at the point of computing the gains or profits of a person / company for any year of income. Capital deductions are divided into four deductions:

1. Industrial Building Deductions
   It applies to the capital expenditure incurred by a person on the construction of an industrial building to be used in a business carried out by them or their lessee. This allowance is claimed by the person who incurred the capital expenditure i.e. the owner of the building and the building must be used for the purpose of the business only so as to enjoy the industrial building deduction. It is granted on a straight-line basis on the balance of constructions. The applicable rates are as follows:
   • Industrial Building-2.5% capital deduction applicable within the first Forty (40) years of operation
   • Hotels - 10% capital deduction applicable within the first 10 years of operation
   • Hostels and Educational Buildings certified by the commissioner-50% capital deduction for the first 2 years of operation.
   • Buildings used for training of film producers, actors or crew - 100% capital deduction.
   • Rental residential building approved by the minister in a planned developed area - 25% capital deduction.
   • Commercial building- 25% capital deduction in a developed area.

2. Farm Works Deductions
   This refers to expenditure by the owner or tenant of agricultural land on construction of farm works. Applicable rates include
   • Farmhouse- Allow 1/3 of the expenditure on one house. Employee houses qualify.
   • Any other immovable buildings for the proper operation of the farm deduct 100% of the whole amount.

3. Wear and Tear Deductions
   This is an allowance that is granted to the investor to cater for wear and tear on machinery.

Categories & Applicable Rates for Wear and tear Deductions in Kenya

4. Export processing zones (EPZ) incentives
   Licensed EPZ projects (foreign, local or joint venture) are entitled to the following incentives:

Fiscal benefits

• 10-year corporate income tax holiday and a 25% tax rate for a further 10 years thereafter (except for EPZ commercial enterprises)
• 10-year withholding tax holiday on dividends and other remittances to non-resident parties (except for EPZ commercial licence enterprises)
• Perpetual exemption from VAT and customs import duty on inputs–raw materials, machinery, office equipment, certain petroleum fuel for boilers and generators, building materials, other supplies. VAT exemption also applies on local purchases of goods and services supplied by companies in the Kenyan customs territory or domestic market. Motor vehicles which do not remain within the zone are not eligible for tax exemption.
• Perpetual exemption from payment of stamp duty on legal instruments
• 100%investment deduction on new investment in EPZ buildings and machinery, applicable over 20years.

Other benefits of investing in EPZ include:

• Operation under essentially one licence issued by EPZA. EPZA seeks to minimize bureaucracy and administrative procedures and facilitates licensing, set up and operations of EPZ projects.
• Rapid Project approval and licensing (with exception of projects requiring environmental licence from National Environmental Management Agency (NEMA).
• Liberalised foreign exchange regime and easy repatriation of capital and profits, access to foreign currency accounts, domestic and offshore borrowing.
• Onsite customs documentation and inspection by Customs Staff. All zones have a resident Customs office for on-site customs documentation and clearance.
• Unrestricted investment by foreigners.
• EPZA provides One Stop Shop service for facilitation and aftercare.
• All zones are built to exacting international standards and provide facilities suited to export production
• Serviced land and ready factory buildings are available for sale or lease to licensed EPZ companies. Water, sewerage, electricity, all weather roads and an illuminated perimeter fence or wall are standard requirement for zones.
• Zone developers provide 24-hour security, street lighting, landscaping and street cleaning services in the zones. Private garbage collection firms are retained to dispose of normal office waste.
• Office premises and storage warehouses are available for lease in most zones.

Through the Tax Remission for Exports Office (TREO), the government of Kenya encourages local manufacturers to export their products by remitting duty and VAT (duty drawbacks) on raw materials used. Other forms of physical and tax incentives are availed under the Special Economic Zones (SEZ) scheme.

Burundi Standard Incentives for Investors

Written on 30 May 2022. Posted in Investment Guide

The following are the fiscal and non-fiscal incentives offered to investors in Burundi:

1. Exemption of charges on property transfer (mutation fee)
2. No duty on Raw material, Capital goods & Specialized vehicles
3. No customs duty is charged if investment goods are made within the EAC or COMESA
4. Corporate tax rate: 30%. It is reduced by 2% if 50-200 Burundians are employed; it is reduced by 5% if more than 200 Burundians nationals are employed.
5. Free repatriation of profit after payment of tax
6. Cheapest labour force in the region
7. Business registration in less than one working day
8. Moderate climate along the year