Yes.

An Export Processing Zone (EPZ) enterprise which does not engage in any commercial activities is exempted from paying any corporation tax for a period of 10 years starting with the year in which production, sales or receipts relating to the activities for which that enterprise has been licensed as an EPZ enterprise commence.

 After the 10th year, the corporation rate of tax will be 25% for the period of 10 years commencing immediately thereafter.

“Commercial activities” referred to above, include trading in, breaking bulk, grading, repacking, or relabelling of goods and industrial raw materials

Though exempt from corporation tax, there following are tax obligations that the EPZ enterprise would be liable for during the period in which it is exempt from corporation tax:

1. The enterprise shall be deemed to be a non-resident subject to a non-resident rate of withholding tax on payments made to the enterprise. Where such payments are made by a person who is not an EPZ enterprise, the tax shall be final tax; and


2. Payments by an export processing zone enterprise to any person other than a resident person shall be deemed to be exempted from tax.


3. The employees and directors, other than non-residents, of an export processing zone enterprise shall be liable to tax on their employment income and the EPZ enterprise employing them will be required to deduct and remit tax from their employment income.

It is important to note that for the period an EPZ enterprise is exempt, it will still be required to submit an annual return of income.

In the event of failure to submit a return or late submission of a return, the enterprise will be liable to a penalty of two thousand shillings per day for as long as the return remains unfiled. This penalty shall for purposes of provisions relating to the deduction and recovery of the tax be deemed to be tax.