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Three companies rush to Kenya, create 1,500 jobs after Ruto scraps export services tax

US Ambassador Meg Whitman revealed how three US companies began operating in Kenya after the removal of a tax affecting exports.

In a keynote address at the Amcham 2024 Summit, the ambassador revealed that three airlines began operating in Kenya after President William Ruto’s administration removed Value Added Tax (VAT) on export services.

VAT was previously charged at 16 per cent before being zero-rated in the Finance Bill 2023, which outlined tax measures for the current budget.

Consequently, the diplomat noted that the move attracted the three companies that have created jobs for more than 1,500 Kenyans.

A photograph of President William Ruto (centre), US Ambassador to Kenya Meg Whitman (left) and former Foreign Minister CS Alfred Mutua (right) during the visit to Silicon Valley in San Francisco, US , on September 15, 2023.

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“After months of deliberations and consultations with the business community, Kenya is making real progress in improving the business climate. This is what Kenya achieved since last year, including the elimination of 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 started operations in Kenya, creating more than 1,500 jobs between them and growing,” he pointed.

The VAT charge on export services was applied in July 2023 following a directive issued by the President in May 2023.

At the time, Ruto noted that the tax was causing Kenya to lose competitiveness, as airlines and companies offering export services chose to establish themselves in countries such as Uganda and Rwanda.

Ultimately, this also posed a challenge to the country’s export potential.

“One of the key challenges for our business community has been the issue of VAT on exported services. This tax not only makes us uncompetitive but also inhibits investors seeking to make Kenya their regional or global services hub.

“Many companies are already operating from Kenya and serving regional markets,” Ruto announced then.

On the other hand, Whitman maintained that Kenya was among the countries that had enormous economic potential.

He called on investors to choose Kenya because of the opportunities in the energy and blue economy sectors.

“Kenya is now home to multiple climate technology companies that aim to reverse climate change by capturing and storing CO2 emissions. This is cutting-edge,” he said.

An aerial view of Jomo Kenyatta International Airport (JKIA) in Nairobi County.

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KAA