Nairobi SMEs Receive Tax Incentives for Export Activities

SMEs in Nairobi are increasingly leveraging Kenya’s export tax incentives to support their cross-border trade and grow their businesses. Export‑oriented companies operating in designated zones such as Export Processing Zones (EPZs) and Special Economic Zones (SEZs) can benefit from significantly reduced tax liabilities, including a 10‑year corporate income tax holiday followed by a 25% rate for an additional ten years.
Beyond the tax holiday, these SMEs also claim other fiscal advantages: EPZ companies are exempt from VAT and import duty on raw materials, machinery, and inputs for export production, while new capital investments (buildings and machinery) qualify for a 100% investment deduction.Kenya also encourages Manufacturing Under Bond, where raw materials for export manufacturing enter free of duty and VAT.
These incentives are part of Kenya’s broader export‑promotion framework designed to make SMEs more competitive internationally. By reducing input costs and easing tax burdens, the policy supports Nairobi‑based small manufacturers to scale, reinvest savings into innovation, and expand into global markets. However, recent proposals in the 2025 Finance Bill aim to delay some of these benefits — including changes to how investment deductions are claimed — sparking concern that export SMEs may face tighter margins in the future.