Special Economic Zones Act

Section 1. Short title Section This Act may be cited as the Special Economic Zones Act.

Section 2. Interpretation Section In this Act, unless the context otherwise requires— "agricultural zone" means a special economic zone declared as such under section 4 to facilitate the agricultural sector, its services and associated activities; "Authority" means the Special Economic Zones Authority established under section 10 ; "Board" means the Board of Directors of the Authority established under section 12 ; "business processing outsourcing" means the provision of outsourcing services to business for specific business functions or processes such as back office support services in human resources, finance, accounting and procurement amongst other services, and includes the delegation of one or more information technology-intensive business processes to an external provider; "business service park" means a special economic zone declared as such under section 4 to facilitate the provision of services including but not limited to regional headquarters, business processing outsourcing centres, call centres, shared service centres, management consulting and advisory services and other associated services; "business service permit" means an administrative grant of authority to oper...

Section 3. Object and purpose of Act Section development of integrated infrastructure facilities;

Section 4. Declaration of special economic zones Section 4(1) The Cabinet Secretary shall, on the recommendation of the Authority, and in consultation with the Cabinet Secretary responsible for matters relating to finance declare, by notice in the Gazette , any area as a Special Economic Zone as set out in the First Schedule. Section 4(2)(a) define the limits of the zone; and Section 4(2)(b) remain in force until revoked by an order in the Gazette by the Cabinet Secretary and on the recommendation of the Authority. Section 4(3) Where upon receipt of a recommendation under subsection (1) , the Cabinet Secretary considers that gazettement of a special economic zone would infringe upon the public interest, the Cabinet Secretary may refer the recommendation back to the Authority to ensure the protection of that public interest. Section 4(4) A special economic zone shall be a designated geographical area which may include both customs controlled area and on-customs controlled area where business enabling policies, integrated land uses and sector-appropriate on - site and off-site infrastructure and utilities shall be provided, or which has the potential to be developed, whether on a pub...

Section 5. Criteria for designating special economic zones Section nature of the proposed project;

Section 6. Goods to be considered as exported and imported into Kenya Section goods which are taken out from any part of the customs territory and brought into the special economic zone or services provided from part of the customs territory to a special economic zone shall be deemed to have been exported from Kenya; and

Section 7. Goods and services within a special economic zone Section for export;

Section 8. Removal of goods from a special economic zone Section 8(1)(a) stored, sold, exhibited, broken up, repackaged, assembled, distributed, sorted, graded, cleaned, mixed, or otherwise manipulated or manufactured in accordance with the provisions of this Act; or Section 8(1)(b) destroyed under the supervision of the proper officer; or Section 8(1)(c) removed, under the supervision of the proper officer from the special economic zone for export or sent into another special economic zone or bonded factory, either in its original package or otherwise. Section 8(2) Subject to this Act and the customs laws of the East African Community, goods of any description which would be used in the activities of a licensed special economic zone enterprise may be brought into a special economic zone. Section 8(3) A person who contravenes this section commits an offence and is liable to a fine not exceeding twenty million shillings or imprisonment for a term not exceeding three years or both and the goods shall be forfeited under the East African Community Customs Management Act. Section 8(4) The special economic zone enterprise shall also operate in conformity with the specific regulations iss...

Section 9. Receipts and payments of special economic zone enterprises Section Unless otherwise provided under this Act or any other applicable law, payments and receipt of funds by a special economic zone enterprise shall be subject to the provisions of the Central Bank of Kenya Act ( Cap. 491 ) and the Banking Act ( Cap. 488 ).

Section 10. Establishment of the Authority Section 10(1) There is established a body to be known as the Special Economic Zones Authority. Section 10(2)(a) suing and being sued; Section 10(2)(b) purchasing or otherwise acquiring, holding, charging and disposing of movable and immovable property in and out of Kenya; Section 10(2)(c) entering into contracts; Section 10(2)(d) borrowing or receiving money including having its own Fund; and Section 10(2)(e) doing or causing to be done or performing all such things or acts for the proper performance of its functions under this Act, as may be lawfully done or performed by a corporate body.

Section 11. Functions of the Authority Section make recommendations to the Cabinet Secretary on all aspects of designation, approval, establishment, operation and regulation of special economic zones;

Section 12. Board of Directors Section 12(1)(a) a Chairperson to be appointed by the President; Section 12(1)(b) the Principal Secretary of the ministry for the time being responsible for matters relating to industrialization and trade or his designated alternate; Section 12(1)(c) the Principal Secretary to the treasury or his designated alternate; Section 12(1)(d) the Chairperson of the National Land Commission or his designated alternate; Section 12(1)(e) the Commissioner General of the Kenya Revenue Authority or his designated alternate; Section 12(1)(f) four other directors appointed by the Cabinet Secretary, from the private sector or any other public institution being persons who have distinguished service, relevant experience, and expertise. Section 12(1)(g) the Chief Executive Officer who shall be an ex officio member. Section 12(2) No person shall be appointed under subsection (1) (f) unless such person satisfies the requirements of Chapter Six of the Constitution of Kenya.

Section 13. Conduct of business and affairs of the Board Section 13(1) The conduct and regulation of the business and affairs of the Board shall be as set out in the Second Schedule. Section 13(2) Except as provided in the Second Schedule, the Board may regulate its own procedure.

Section 14. Powers of the Board Section 14(1) The Board shall have all powers necessary for the proper performance of the functions of the Authority under this Act. Section 14(2)(a) control, supervise and administer the assets of the Authority in such manner as best promotes the purpose for which the Authority is established; Section 14(2)(b) determine the provisions to be made for capital and recurrent expenditure and for the reserves of the Authority; Section 14(2)(c) receive any grants, gifts, donations or endowments and make legitimate disbursements therefrom; Section 14(2)(d) open such banking accounts for the funds of the Authority as may be necessary; Section 14(2)(e) invest any of the funds of the Authority not immediately required for its purposes in the manner provided in section 25 ; Section 14(2)(f) perform all such other acts or undertake any activity as may be incidental or conducive to the attainment or fulfilment of any of the functions of the Authority under this Act.

Section 15. Remuneration of directors Section The Authority shall pay its directors such remuneration, fees or allowances as it may determine upon the advice of the Cabinet Secretary.

Section 16. Chief Executive Officer Section 16(1) There shall be a Chief Executive Officer of the Authority who shall be appointed competitively by the Board. Section 16(2)(a) possesses a relevant degree from a recognized institution and has at least ten years working experience in matters relating to industry, trade, law, finance, economics, management, entrepreneurship or engineering; Section 16(2)(b) satisfies the requirements of Chapter Six of the Constitution. Section 16(3)(a) be the secretary to the Board; and Section 16(3)(b) subject to the directions of the Board, be responsible for the day to day management of the affairs and staff of the Board.

Section 17. Staff of the Authority Section The Authority may appoint such officers and other staff as are necessary for the proper discharge of its functions under this Act, whether directly or through one-stop shops, upon such terms and conditions of service as the Board may determine and on the advice of the Salaries and Remuneration Commission.

Section 18. Delegation by the Authority Section The Board may, by resolution either generally or any particular case, delegate to any committee or to any member, officer, employee or agent of the Board, the exercise of any of the powers or the performance of any of the functions or duties of the Authority under this Act or under any other written law.

Section 19. Protection from personal liability Section 19(1) The staff of the Authority shall not be personally liable for an act which is done or purported to be done in good faith on the direction of the Authority or the Board in the performance or intended performance of any duty or in the exercise of any power under this Act. Section 19(2) Any expenses incurred by a person referred to in subsection (1) in any suit or prosecution brought against him before any court in respect of any act which is done or purported to be done by him under this Act on the direction of the Board shall, if the court holds that that act was done in good faith be paid out of the Fund, unless the expenses are recovered by him in that suit or prosecution. Section 19(3) The provisions of this section shall not relieve the Authority of the liability in tort or contract, to pay compensation or damages to any person for any injury to him, his property or any of his interests caused by the exercise of any power conferred by this Act, or any other written law.

Section 20. Common seal Section 20(1) The common seal of the Authority shall be kept in such custody as the Board may direct and shall not be used except on the order of the Board. Section 20(2) The affixing of the common seal of the Authority shall be authenticated by the signature of the Chairperson and the Chief Executive Officer and any document not required by law to be made under seal and all decisions of the Board may be authenticated by the signatures of both the Chairperson and the Chief Executive Officer. Section 20(3) Notwithstanding the provisions of subparagraph (2), the Board shall, in the absence of either the Chairperson or the Chief Executive Officer in a particular matter, nominate one member to authenticate the seal on behalf of either the Chairperson or the Chief Executive Officer. Section 20(4) The common seal of the Authority when affixed to a document and duly authenticated shall be judicially noticed and unless the contrary is proved, any necessary order or authorization by the Board under this section shall be presumed to have been duly given.

Section 21. Establishment of the Fund Section 21(1) There is established a Fund of the Authority to be known as the General Fund which shall vest in the Authority and shall be administered by the Board. Section 21(2)(a) monies provided by Parliament for that purpose, towards expenditure incurred by the Authority in the exercise of its powers or the performance of its functions under this Act; Section 21(2)(b) such fees, monies or assets as may accrue to or vest in the Authority in the course of the exercise of its powers or the performance of its functions under this Act or under any written law; and Section 21(2)(c) all monies from any other source provided for or donated or lent to the Authority. Section 21(3) There shall be paid out of the funds of the Authority all such sums of money required to defray the expenditure incurred by the Authority in the exercise, discharge and performance of its objectives, functions and duties under this Act. Section 21(4) The balance of the funds of the Authority at the end of the financial year shall be utilized as directed by the National Treasury.

Section 22. Financial year Section The financial year of the Authority shall be the period of twelve months ending on the thirtieth of June in each year.

Section 23. Annual estimates Section 23(1) At least three months before the commencement of each financial year, the Board shall cause to be prepared estimates of the revenue and expenditure of the Authority for that year. Section 23(2)(a) the payment of allowances and the charges in respect of the directors and the salaries, allowances and other charges in respect of staff of the Authority; Section 23(2)(b) the payment of pensions, gratuities and other charges in respect of staff of the Authority; Section 23(2)(c) the proper maintenance of the buildings and grounds of the Authority; Section 23(2)(d) the maintenance, repair and replacement of the equipment and other property of the Authority; Section 23(2)(e) the creation of such reserve funds to meet future or contingent liabilities in respect of retirement benefits, insurance or replacement of buildings or equipment, or in respect of such other matters as the Board may deem appropriate; Section 23(2)(f) the funding of promotion and marketing of special economic zones; Section 23(2)(g) the funding of training, research and development activities of the Authority; and Section 23(2)(h) any other expenditure incurred by the Authority...

Section 24. Accounts and audit Section 24(1) The Board shall cause to be kept all proper books and records of income, assets of the Authority. Section 24(2)(a) a statement of the income and expenditure of the authority during that year; and Section 24(2)(b) a balance sheet of the Authority on the last day of that year. Section 24(3) The accounts of the Authority shall be audited and reported upon in accordance with the Public Audit Act ( Cap. 412B ). Section 24(4) The Authority shall within four months of the closure of the financial year, submit to the Cabinet Secretary, a report on the operations of the Authority during that year.

Section 25. Investment of funds Section The Authority may invest its funds in government securities, in which for the time being trustees may by law invest in trust funds, or in any other securities which the National Treasury may, from time to time, approve for that purpose.

Section 26. Licence to operate in special economic zone Section carry on business as a special economic zone developer or operator or enterprise;

Section 27. Application and issue of licence Section 27(1) A person who, intends to carry on business as a special economic zone developer, operator or enterprise, shall apply in the prescribed form to the Authority for an appropriate licence or for a renewal of the licence. Section 27(2) On receiving an application for licence or for a renewal of a licence, the Authority, may on the recommendation of the Commissioner of Customs and upon payment of the prescribed fee, issue to the applicant the appropriate licence or renew the licence. Section 27(3) In evaluating applications for special economic zone developer, operator and enterprise licences, the Authority shall assess the specific engineering and financial plans, financial viability, and environmental and social impact of the applicant's proposed special economic zone project, as appropriate. Section 27(4) The Authority shall expeditiously render its decisions on licensing under this Act within one month from the date on which the duly completed application form is submitted together with relevant supporting documents. Section 27(5)(a) be in the prescribed form; Section 27(5)(b) authorize the licensee to carry on business as a...

Section 28. Qualifications of a special economic zone developer and operator Section be a company incorporated in Kenya or a public entity, for the purpose of undertaking special economic zone activities;

Section 29. Special economic zone enterprises Section 29(1) The benefits prescribed in Part VI of this Act shall not accrue to any enterprise unless it holds a valid licence issued by the Authority. Section 29(2)(a) is incorporated in Kenya whether or not it is one hundred per cent foreign owned; Section 29(2)(b) proposes to engage in any activity or activities eligible to be undertaken by a special economic zone enterprise in the special economic zone; Section 29(2)(c) does not have a negative impact on the environment or engage in activities impinging on national security or presenting a health hazard; and Section 29(2)(d) conducts business in accordance with the laws for the time being in force save for any exemptions under this Act.

Section 30. Register of licences Section 30(1)(a) the company name; and Section 30(1)(b) the physical address at which the company carries on its business. Section 30(2)(a) the holder of the licence ceases to carry on the business to which the licence relates; or Section 30(2)(b) a change occurs in any particulars which are required to be entered in the register of licence holders with respect to the holder of a licence,

Section 30A. Issuance of Special Economic Zone Business Service Permit Section 30A(1) A person who intends to provide a service within a special Economic zone for which no incentive or benefit accrues under this Act, shall apply in the prescribed form to the Authority for a special economic zone business service permit or for a renewal of the permit. Section 30A(2) The Cabinet Secretary may prescribe in regulations the rights and obligations which shall apply upon the issuance of the permit issued under [ Act No. 20 of 2024 , s. 31.]

Section 31. Activities permitted within a special economic zone Section the activities in respect of which the enterprise is licensed; and

Section 32. Facilities within a special economic zone Section 32(1) Taking into account the general intent of the special economic zone developer licence, the Authority may require the special economic zone developer to provide and maintain in a special economic zone such facilities including adequate enclosure to separate a special economic zone from the customs territory, as it may consider necessary for the proper and efficient function of the zone. Section 32(2) The Authority shall not issue an order for cessation of any activities or removal of any goods without first giving the concerned enterprise an opportunity of being heard. Section 32(3) The proper officers in each special economic zone shall offer on-site inspection to the special economic zone for imports into, and exports out of, the special economic zone. Section 32(4) The Authority shall be responsible for the monitoring and enforcement of all rules, within special economic zones.

Section 33. Rights and obligations of an economic zone developer or operator Section 33(1)(a) act or appoint a special economic zone operator to undertake management and administration of the special economic zone on its behalf subject to subsections (2) , (3) and (4) of this section, section 28 (b) and such other licensing requirements as may be prescribed; Section 33(1)(b) lease, sub-lease or sell land or buildings to licensed special economic zone operators special economic zone service permit holders and enterprises and residents, and charge rent or fees for other services that may be provided; Section 33(1)(c) acquire, dispose or transfer special economic zone lands or other assets; Section 33(1)(d) develop, operate and service special economic zone lands and other assets in conformity with applicable law and its licence; Section 33(1)(e) provide utilities and other services in the special economic zone, in accordance with its licence, and to charge fees for such services; Section 33(1)(f) provide utilities and other services outside the special economic zone in conformity with applicable law; Section 33(1)(g) enjoy the benefits that may accrue under the provisions of this Act...

Section 34. Rights of special economic zone enterprises Section the full protection of its property rights against all risks of nationalization or expropriation;

Section 35. Benefits accruing to special economic zone enterprises, developers and operators Section 35(1) All licensed special economic zone enterprises, developers and operators shall be granted tax incentives as specified in the respective tax laws. Section 35(2)(a) stamp duty on the execution of any instrument relating to the business activities of special economic zone enterprises, developers and operators; Section 35(2)(b) the provisions of the Foreign Investments and Protection Act ( Cap. 518 ) relating to certificate for approved enterprise; Section 35(2)(c) the provisions of the Statistics Act ( Cap. 112 ); Section 35(2)(d) the payment of advertisement fees and business service permit fees levied by the respective County Governments' finance Acts; Section 35(2)(e) general liquor licence and hotel liquor licence under the Alcoholic Drinks Control Act ( Cap. 121 ); Section 35(2)(f) manufacturing licence under the Tea Act ( Cap. 343 ); Section 35(2)(g) licence to trade in unwrought precious metals under the Trading in Unwrought Precious Metals Act (Cap. 309)(repealed); Section 35(2)(h) filming licence under the Films and Stages Plays Act ( Cap. 222 ); Section 35(2)(i) rent or...

Section 36. Powers of the Cabinet Secretary Section The Cabinet Secretary may from time to time direct the Authority to furnish in such form as may be prescribed returns, accounts and any other information with respect to the work and activities of the Authority.

Section 37. Dispute resolution Section 37(1) Where a dispute arises between a special economic zone developer, operator or enterprise and the Authority or the Government in respect of the special economic zone entity, all efforts shall be made to settle the dispute through negotiations and mutual agreement for an amicable settlement within thirty days. Section 37(2)(a) in accordance with the rules of procedure set forth for arbitration by the United Nations Commission on International Trade Law, the International Chamber of Commerce in Paris or the International Center for Settlement of Investment Disputes Resolution; or Section 37(2)(b) within the framework of any bilateral or multilateral agreement on investment protection to which the Government and the country of which the investor is a national are parties; or Section 37(2)(c) in accordance with the Arbitration Act ( Cap. 49 ). Section 37(3) If the parties do not agree to the mechanisms of settlement of dispute under subsection 2(a) and (b) within fourteen days, the Arbitration Act shall apply.

Section 38. Exemption from Stamp duty Section The Authority shall be exempt from payment of any stamp duty chargeable under the Stamp Duty Act ( Cap. 480 ) for land transactions.

Section 39. Regulations Section 39(1) The Cabinet Secretary shall, upon the recommendation by the Authority, make regulations in respect of any matter required by this Act to be prescribed or in respect of which regulations are authorized to be made. Section 39(2)(a) determine criteria for the designation and gazetting of all special economic zones; Section 39(2)(b) determine the application process, criteria, conditions, terms and procedures for designation of special economic zones and licensing of special economic zone developers, operators and enterprises; Section 39(2)(c) determine the form of licences to be issued under this Act and the procedures from amendment and revocation of the licences; Section 39(2)(d) determine the general conditions of entry of persons into a special economic zone; Section 39(2)(e) require information from special economic zone developers, operators and enterprises; Section 39(2)(f) determine the rules pertaining to the establishment, functioning, operations and procedures for the special economic zones one-stop-shops; Section 39(2)(g) determine the investment rules for special economic zones; Section 39(2)(h) determine the land use rules for specia...