US Ambassador Meg Whitman has revealed how three American companies commenced operations in Kenya after the elimination of a tax that was targeting export business.
In a keynote speech at the Amcham Summit 2024, the ambassador revealed that three airlines started operating in Kenya after President William Ruto's administration eliminated the Value Added Tax (VAT) on export services.
Previously, the VAT was charged at 16 per cent before it was zero-rated in the 2023 Finance Bill which outlined tax measures for the current budget.
Consequently, the diplomat noted that the move attracted the three companies which have created jobs for over 1,500 Kenyans.
"Following months of deliberations and consultations with the business community, Kenya is making real progress in improving the business climate. This is what Kenya accomplished since last year including the elimination of the VAT on export services.
"The lifting of the export services tax had an immediate impact. Since the Ruto Administration lifted that tax, United Airlines, JetBlue, and American Airlines have all started operations in Kenya, creating over 1,500 jobs between them, and growing," she noted.
The VAT charge on export services was effected on July 2023 following a directive issued by the President on May 2023.
At the time, Ruto noted that the tax was making Kenya uncompetitive as airlines and companies offering export services opted to set up shop in countries like Uganda and Rwanda.
Ultimately, this also posed a challenge to the export potential of the country.
"One of the key challenges for our business community has been the VAT issue on exported services. This tax not only renders us uncompetitive but also inhibits investors seeking to make Kenya their regional or global services hub.
"Many companies are already operating out of Kenya and serving regional markets," Ruto announced then.
On the other hand, Whitman maintained that Kenya was among the countries that had huge economic potential.
She called on investors to choose Kenya owing to the opportunities in energy and blue economy sectors.
"Kenya is now the home to multiple climate tech companies that are aiming to reverse climate change by capturing and storing CO2 emissions. This is cutting-edge stuff," she stated.
