This archive report was first published on 1 July 2020.
On July 1, 2020, the Treasury introduced a new measure to boost Kenya's exports by imposing an extra 2.5 percent duty on local sales from the Export Processing Zones (EPZs).
The move aims to address the growing suspicion of diversion of EPZ goods into the Kenyan market, which undermines the country's export drive.
According to the Treasury, the new duty will ensure compliance with the 80:20 rule, which requires EPZs to sell at least 80 percent of their products in global markets.
However, the 80:20 rule is currently suspended due to the coronavirus pandemic, but the Treasury plans to make it more stringent once normal business resumes.
Experts warn that the additional duty will make EPZ products more expensive, given that they already pay various taxes.
"The duty is in addition to custom duties applicable on the products from the EPZs for home use," said KPMG Kenya. "The additional duty will make EPZ products more expensive given that Special Economic Zones have unfettered access to local markets once they account for custom duties on products."
