At a glance
- EPZ enterprises pay no corporate tax for ten years, 25% for the next ten, then the standard 30%.
- SEZ enterprises, developers and operators pay 10% corporate tax for ten years, then 15% for the next ten.
- EPZ enterprises must sell at least 80% of their output outside the East African Community.
- SEZs suit companies that serve the Kenyan market as well as export markets.
- A May 2026 amendment lifted the ten-year cap on SEZ withholding tax exemptions and zero-rated VAT on supplies to SEZ operators.
Two regimes with different purposes
Kenya runs two zone systems. Export Processing Zones, managed by the Export Processing Zones Authority, exist to attract export-oriented industrial investment. Special Economic Zones, created under the Special Economic Zones Act and managed by the Special Economic Zones Authority, cover a wider range of activities, from manufacturing and logistics to services and technology, and operate a one-licence framework for zone businesses.
Side by side
| Export Processing Zone | Special Economic Zone | |
|---|---|---|
| Regulator | Export Processing Zones Authority | Special Economic Zones Authority |
| Corporate income tax | 0% for 10 years, 25% for the next 10, then 30% | 10% for 10 years, then 15% for the next 10 |
| Market | Exports: at least 80% of sales outside the East African Community | Export and domestic markets, with customs rules on sales into Kenya |
| Who gets the tax holiday | Manufacturers and service exporters; commercial traders do not | Licensed enterprises, developers and operators |
| Other headline incentives | Duty and VAT relief on inputs; deductions for new buildings and machinery | 100% investment deduction on buildings and machinery; 5% withholding tax on payments to non-residents; VAT zero-rating on supplies into the zone |
| Licence | One-year renewable licence for zone activities | A single licence from the Authority |
The tax rates follow PwC's Kenya tax summary, last reviewed in July 2026, and Chambers' 2026 corporate tax guide. Both confirm the 15% SEZ rate for the second decade.
What changed in 2026
On 11 May 2026 the President signed the Special Economic Zones (Amendment) Bill into law. It removed the ten-year cap on withholding tax exemptions for royalties and management fees paid by zone businesses, zero-rated VAT on supplies to SEZ operators, and created a framework for petroleum and energy zones, including the South Lokichar Basin, with a minimum ten-year licence for petroleum zone operators.
A separate Business Laws (Amendment) Bill, 2025 proposed further changes to both the SEZ and EPZ Acts, and the government has announced a review of the SEZ framework aimed at stopping speculative real-estate projects inside zones. Check the status of both before you commit to a zone.
Which one suits you
- An export manufacturer selling mostly outside the East African Community fits the EPZ model, and gains the longest tax holiday.
- A business that sells into Kenya as well as abroad, or provides services, logistics or technology, usually fits an SEZ better.
- A company that sells mainly in Kenya may gain little from a zone once customs treatment of domestic sales is counted, and a standard entity with an investment deduction can serve it well.
- Financial services firms, holding companies and regional headquarters should look at the Nairobi International Financial Centre, whose certified start-ups pay 15% for three years and 20% for the next four under the Finance Act, 2025.
Incentives come with conditions
Zone incentives depend on keeping the licence, meeting the regime's rules and accepting customs control over goods moving in and out. Rates are set by statute and can change in any Finance Act. Build your business case on today's rates, and stress-test it against a change.
Checked against the sources below on 12 October 2026. This guide is general information, not legal or tax advice. Rules change with each Finance Act and gazette notice, so confirm the current position before you act, or ask us.
Sources
- PwC Worldwide Tax Summaries: Kenya, taxes on corporate income (reviewed 17 July 2026)
- Chambers Global Practice Guides: Corporate Tax 2026, Kenya
- PwC Worldwide Tax Summaries: Kenya, tax credits and incentives
- Kenya Investment Authority: fiscal and non-fiscal incentives
- DHL: Go global with Kenya's Export Processing Zones
- Kenyans.co.ke: President Ruto assents to three major bills on tax reform and investment growth
- Cliffe Dekker Hofmeyr: Tax highlights from the Business Laws (Amendment) Bill, 2025
- Serrari Group: Kenya cracks down on SEZ abuse with a framework review