With increasing taxes, new bureaucratic hurdles, and the devaluation of the shilling, the cost of doing business in Kenya has been rising. Due to these unprecedented challenges, firms have sought opportunities to reduce costs while also optimizing their revenues in order that they may survive.
- Taxation plays a significant role in a company’s income statement – sometimes being as high as 40% of expenses.
- The recently opened Two Rivers International Finance & Innovation Centre (TRIFIC) special economic zone (SEZ) is providing a unique solution for service-sector companies both locally and internationally.
- The 2015 law on SEZs defines it as, “…a designated and declared area, gazetted for the purpose of undertaking SEZ activities while enjoying special economic regulations that differ from general trade, tax and investment rules.”
Unlike Kenya’s 15 other SEZ’s, which largely target manufacturing, agriculture, and export/import players, TRIFIC is focused on supporting business services such as fintechs, management consulting, advisory services, and investment firms. A privately licensed SEZ, TRIFIC SEZ is backed by Centum Investment, one of Kenya’s largest and most prolific investment companies.
Unlocked tax savings makes business easier
With taxes and wages taking up a large proportion of business costs, any chance an entrepreneur or executive has to lower their tax burden should be explored.
If you were to base a service-sector business in Westlands or Eastleigh, you must charge clients a 16% VAT, in addition to paying a 30% Corporate Income Tax, along with a host of other taxes.
TRIFIC SEZ relieves this burden by allowing companies in the SEZ to only pay a 10% Corporate Income Tax (CIT) for the first 10 years. Its special economic zone rules also eliminate the state-mandated VAT.
Companies hosted at Two Rivers International Finance & Innovation Centre (TRIFIC) SEZ have the chance to increase their earnings by up to about 49% in their first 10 years under this special tax policy due to the massive tax burden savings provided by the elimination of VAT and lower CIT.
Beyond taxes: other TRIFIC SEZ benefits
Running a business requires other costs, including salary and rent. However, one of the least discussed costs which burdens small teams and companies working to grow is the opportunity cost of the team’s time.
- TRIFIC also saves companies time and money with its ‘One-Stop-Shop’ business facilitation services.
- These services are designed to directly assist businesses within its SEZ with various things such as business onboarding, expatriate onboarding, and work permit facilitation.
- ESG compliance is another cost which often takes time and money from teams, but TRIFIC assists with this as well.
By aligning with all 17 pillars of the UN Sustainable Development Goals (SDG’s) and remaining under the umbrella of the Centum Foundation, the SEZ is designed to facilitate ESG compliance and reinforce individual firm’s ESG strategies.
TRIFIC possesses a global network advantage and advisory services. Market scaling and expansion are demanding jobs for any organization. With a well rounded team of professionals well versed in growing and expanding businesses across Africa, businesses within TRIFIC SEZ are poised to thrive.
While not all service-sector firms fall within the criteria for the TRIFIC SEZ, a resourceful business leader would investigate what opportunities exist for them at TRIFIC.
