Businesses investing in Kenya’s multi-billion dollar Konza technology city are being promised tax exemption for ten years in a bid to attract more investors.

This is according to proposals outlined in the ‘Konza Technopolis Development Authority Bill 2014’, which recommends that all businesses operating within the $10 billion Silicon Savannah project be exempt from paying 30% income tax and 16% value added tax (VAT) for the first ten years.

“A person licensed to operate in the Konza Technopolis and engaged in the businesses set out may be granted any or all of the exemptions and incentives as set out in the third schedule,” reads part of the proposed bill.

The bill, currently awaiting parliamentary approval, also proposes a 15% VAT for such firms after the elapse of the ten year period, which is 1% lower than the current VAT tax rate.

Foreign firms operating in the tech city will also be exempt from a rule that requires 20% of their ownership to be reserved for local investors.

Moreover, expatriates in these companies are also planned to be exempt from paying income tax on their salaries.

To prevent abuse of these exemptions; though, the bill notes the authority intends consulting with the treasury cabinet secretary to determine whether or not a firm will be allowed all the tax exemptions.

These proposals have; however, already raised praise and questions among tax experts.

Speaking to ITWeb Africa, Mike Muremi, who is a tax advisor at Finsolution Consultants, said that tax exemption is one of the many available options that countries use to attract investors.

“Konza City is a public private partnership that will require a lot of money, and I believe The Konza Technopolis Development Authority is doing all within its powers to ensure that the project attracts enough money to build and sustain its operations,” Muremi told ITWeb Africa.

“The proposal to have international firms exempted from the 20% local shareholding rule could however prove controversial, as local investors could feel left out, and there is a danger of these foreign firms flooding the technocity,” Muremi added.

He was quick to add that by exempting these foreign firms from tax rules, setting up of business by these multinationals will be easier and faster, thereby helping the project to possibly realise its goals faster.

“I think Konza Technopolis Development Authority is more interested in the creation of 200,000 jobs, and it is moving swiftly to remove any bottlenecks that could pose challenges for both local and international firms willing to set up shop at Konza,” he added.

The development of Kenya’s technology city has been hit with challenges ranging from court cases on land ownership to a lack of funds for the execution of the project.

But the Konza Technopolis Development Authority’s Bill is seen as helping to ensure the project takes off despite being behind schedule by almost a year since the project’s groundbreaking.