Companies listing by introduction on the Nairobi Securities Exchange will start enjoying tax holidays following amendment to the Income Tax Act.
The amendment allows a company introducing shares without raising cash to pay corporate tax at the rate of 25 per cent for a period of five years.
Listing by introduction means the company only offers the public an opportunity to own part of it.
“We expect this provision to spur listing of additional companies on the Nairobi Securities Exchange,” said Capital Markets Authority acting chief executive Paul Muthaura.
Previously the tax holiday has been limited to companies conducting an initial public offering (IPO).
In the last five years only two firms have listed through an IPO compared to eight that listed by introduction indicating most do not come to the market to immediately raise cash.
The Finance Act was assented to by President Uhuru Kenyatta on September 11. Companies, which have at least 20 per cent of their issued capital listed are allowed to pay tax at a reduced rate of 27 per cent for three years, compared to the normal tax rate of 30 per cent.
