Trade CS nominee Mvurya vows to crack down on tax evaders in SEZs

Trade Cabinet Secretary nominee Salim Mvurya has vowed to crack down on Special Economic Zone tax evaders if approved to head the role.

His commitment comes in response to concerns raised by Majority Leader Kimani Ichungwa’h about the misuse of these zones for tax evasion.

"A lot of these Special Economic Zones are seen as havens for tax evasion. A number of import products for SEZs, but then dump them into the domestic economy. What will you do to stem this abuse?” Ichungwa’h posed.

In his response, Mvurya said he will outline a plan to enforce tax compliance across all manufacturers operating within SEZs. He stressed that significant benefits offered to SEZs should not come without corresponding tax contributions.

“All manufacturers will pay taxes. We will use the institutions within the ministry to ensure compliance. If they evade taxes, it defeats the purpose of prioritising them in the SEZs. We will utilize all available options to ensure tax compliance, as we cannot provide all the benefits without ensuring they pay taxes. That will not be accepted,” he said.

Special Economic Zones are designated areas with distinct business and trade regulations, aiming to boost trade, investment, job creation, and technological advancement. Kenya has established SEZs in Mombasa (including Dongo Kundu Free Port), Lamu, and Kisumu.

The zones aim to draw in investments, broaden both domestic and export markets, and foster local entrepreneurship.

Salim Mvurya, Trade CS nominee, takes an oath before appearing before the National Assembly’s Committee on Appointments on Saturday, August 3, 2024.(Photo: Parliament)

The development of the 3,000-acre Dongo Kundu SEZ in Mombasa, however, has faced significant delays due to allegations of land grabbing and complications in relocating over 1,648 residents.

Despite a 2023 offer from the Kenya Ports Authority (KPA) to lease land, only three companies have commenced development.

In contrast, the Naivasha SEZ has seen substantial investment, with five international companies already on site and 16 more planning to invest. The Mombasa SEZ, however, has lagged, prompting Mombasa Women Representative ZamZam Mohamed to seek transparency from KPA regarding lease applications and approvals.

In a letter dated August 1, 2024, Mohamed requested details on the lease applications, approvals, and payments related to the Dongo Kundu land.

“I am requesting further information on the number of requests for leasing land and any communication or payment records. Compliance with Article 227 of the Constitution, which mandates fair and transparent procurement, is essential,” Mohamed said.

KPA responded by affirming that all procedures are being followed and that efforts are underway to relocate squatters to facilitate SEZ development.