Barriers The American Investors Face When Investing In Kenya
The US State Department has identified delays in Value Added Tax (VAT) refunds as one of the challenges facing American investors in Kenya.
As detailed in the 2024 Investment Climate report, the State Department noted that VAT refunds took longer than the six months specified by law.
As a result, businesses owned by both US investors and Kenyans were impacted.
VAT refunds should be processed within six months, as outlined in the Finance Act 2023.
Every year, we publish a report to help American businesses make informed decisions on where to invest worldwide, spurring economic growth at home and abroad. Take a look at the latest report prepared by our economic officers stationed around the world.https://t.co/1NUonzZK0o
— Department of State (@StateDept) July 17, 2024
“Companies in Kenya, including US investors, experience a slow pace of value-added tax (VAT) refunds and an inability to offset future tax liabilities despite tax law stipulating a six-month time limit for VAT refunds or allowing offsets on future tax bills.
“The PwC 2020 Paying Taxes Report, which assesses countries based on the efficiency of their tax systems, reported that it took 27.3 weeks on average to obtain a VAT refund in Kenya,” read the report in part.
On the other hand, the US government noted that investors were having difficulty obtaining operating licenses on time.
“In 2023, Kenya pursued several tax and regulatory reforms aimed at improving the investment climate including removing the VAT on exported services, reimbursing verified tax refund claims within six months or allowing the taxpayer to offset the claims against future tax liabilities, and removing the tax on unrealized gains on employee-allocated shares for startup companies.
“Implementation of VAT refunds and offsets were still in progress in 2023. Despite regulatory reforms, US businesses operating in Kenya still face burdensome bureaucratic processes and delays in receiving necessary business licenses,” the US government added.
According to the report, US Foreign Direct Investment (FDI) in Kenya in 2023 was Ksh36.1 billion (USD 227 million).
However, this was a decrease from the projected Ksh39 billion in investments for 2022.
Some of the top US investments in Kenya are in the technology, agriculture, and infrastructure sectors, among others.
Barriers The American Investors Face When Investing In Kenya
