https://www.polity.org.za
Deepening Democracy through Access to Information
Home / Legal Briefs / Bowmans RSS ← Back
Close

Email this article

separate emails by commas, maximum limit of 4 addresses

Sponsored by

Close

Embed Video

Interest on project finance loans from foreign lenders now exempt from tax

Interest on project finance loans from foreign lenders now exempt from tax

5th June 2015

SAVE THIS ARTICLE      EMAIL THIS ARTICLE

Font size: -+

Interest on loans from foreign lenders financing projects in certain sectors in Kenya are now exempt from withholding tax. The Cabinet Secretary for the National Treasury on 22 May 2015 published a legal notice (Legal Notice No. 91 of Kenya Gazette Supplement No. 67) exempting interest on loans provided by foreign sources for investing in energy, water, roads, ports, railways or aerodromes projects, from tax.

Prior to this Legal Notice, unless a specific exemption had been granted to a particular lender, interest on loans from foreign lenders was subject to withholding tax at the rate of 15%. In contrast, interest on loans from banks or financial institutions that are resident or have branches in Kenya are exempt from withholding tax on interest. This put foreign lenders at a disadvantage compared to Kenyan lenders. Foreign lenders would typically in turn pass the tax on to the Kenyan borrowers by requiring a gross-up of the withholding tax, and this would result in their loans being much more expensive, as compared to loans from their Kenyan counterparts.

Advertisement

This exemption levels the field for foreign lenders financing projects in the specified sectors. Most infrastructure development projects in Kenya are financed by foreign development finance institutions (DFIs) and foreign lenders.

The exemption demonstrates the Government’s focus on infrastructure development in Kenya, and particularly road, port, railway and aerodrome projects and projects in the energy and water sectors.

Advertisement

Contact: Paras Shah - Head of Mergers and Acquisitions and Projects, Alex Mathini - Head of Tax, or Kamimi Christine Mweti - Head of Banking & Finance at Coulson Harney, Bowman Gilfillan’s office in Kenya.

EMAIL THIS ARTICLE      SAVE THIS ARTICLE

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here

Comment Guidelines

About

Polity.org.za is a product of Creamer Media.
www.creamermedia.co.za

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more

Subscriptions

We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store

Advertise

Advertising on Polity.org.za is an effective way to build and consolidate a company's profile among clients and prospective clients. Email advertising@creamermedia.co.za

View options
Free daily email newsletter Register Now