President William Ruto has signed three key economic Bills into law in a move the government says will boost investment, reduce the tax burden on businesses and accelerate Kenya’s long-term development agenda.
The laws — assented to on Monday, May 11 — include the Income Tax (Amendment) Bill, the Special Economic Zones (Amendment) Bill and the Technopolis Bill, all of which are expected to reshape the country’s investment landscape ahead of the next financial year.
The most notable of the three is the Income Tax (Amendment) Bill, sponsored by Molo MP Kuria Kimani, which introduces sweeping reforms aimed at easing corporate restructuring and attracting foreign investment.
Under the previous tax framework, companies transferring value or assets to shareholders during internal reorganisations risked being subjected to withholding tax after the Kenya Revenue Authority (KRA) classified such transactions as taxable dividends.
However, the newly signed law exempts certain internal asset transfers from being treated as taxable distributions, provided the transfers are proportional to existing shareholding structures and involve subsidiaries within the same corporate group.
The reforms are expected to offer major relief to companies seeking to reorganise operations without incurring additional tax liabilities.
The law also addresses Capital Gains Tax (CGT) obligations involving non-resident investors and tightens KRA registration requirements for foreign entities operating in Kenya.
Government officials argue that the changes are designed to make Kenya more competitive in attracting international capital and private equity investments.
With the law set to take effect from July 1, the beginning of the next financial year, the State hopes the reforms will stimulate business expansion and improve investor confidence amid growing pressure on the economy.
Speaking after the assent, State House said the new legislation forms part of President Ruto’s broader economic transformation agenda focused on increasing investment inflows, creating jobs and improving the ease of doing business.
In a separate move, the President also signed the Special Economic Zones (Amendment) Bill into law, targeting large-scale energy and petroleum investments.
The law specifically focuses on upstream and midstream petroleum operations, including projects linked to the South Lokichar Basin in Turkana County.
Among the major changes introduced is a mandatory minimum 10-year licence period for petroleum Special Economic Zone operators, a provision intended to guarantee security of tenure for investors undertaking long-term projects.
The law further removes the previous 10-year limit on withholding tax exemptions for royalties and management fees, while also amending the VAT Act to zero-rate supplies made to Special Economic Zone operators.
Analysts believe the incentives could significantly increase investor appetite in Kenya’s energy sector as the government pushes to commercialise oil production.
Meanwhile, President Ruto also assented to the Technopolis Bill, paving the way for the formal establishment and management of Konza Technopolis, the flagship smart city project often referred to as “Silicon Savannah.”
The Bill had a lengthy legislative journey after being introduced in Parliament in April 2024 before later passing through both the National Assembly and Senate due to its implications on land and county governance.
The new law establishes a dedicated authority to oversee Konza Technopolis and creates a Technopolis Dispute Resolution Tribunal to handle emerging disputes within the technology city.
It also introduces a regulatory framework governing technology parks, investment incentives and penalties for non-compliance.
The government hopes the law will accelerate Kenya’s ambitions of becoming a regional technology and innovation hub while attracting multinational firms and digital investors.
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