What Kenya's Government Should Change to Become an IT Exporter: Lessons from India, the Philippines and the UAE

In an earlier post, I compared Kenya with Nigeria, Ghana and South Africa and argued that the Silicon Savannah hasn't missed the bus to become Africa's IT exporter — but that it needs to run for it now.

This post is about how. Specifically: what should Kenya's government change in its policies to turn the country into a serious exporter of IT and digital services?

The good news is that Kenya doesn't have to guess. Three very different countries have already done it:

India, which built the world's largest IT services export industry almost from scratch.
The Philippines, which turned English-speaking graduates into nearly two million IT and business-process jobs.
The United Arab Emirates, which made itself a magnet for technology companies and talent from all over the world.

The gap between them and Kenya is enormous:

Country	Tech & IT-BPM exports / revenue	People employed
India	~US$246 billion in tech exports (FY2026 estimate)	~5.8 million
Philippines	~US$40 billion IT-BPM revenue (2025)	~1.9 million
Kenya	~US$0.85 billion ICT service exports (2024)	50,000+ in BPO & ICT services

Sources: Nasscom Strategic Review 2026; IT & Business Process Association of the Philippines (IBPAP); World Bank. Each country measures its industry differently, so treat this as an order-of-magnitude comparison.

None of these countries got there by accident. Each made deliberate policy choices — and kept them in place long enough for businesses to trust them.

Lesson 1 — India: build the rails, then keep them in place

In 1991, India had poor telecoms, strict foreign-exchange controls and a small software industry. Its government didn't try to pick winners. Instead, it built the rails that let exporters succeed.

Software Technology Parks of India (STPI), launched in 1991, gave software exporters a single window for approvals, high-speed data links at a time when telecoms were a state monopoly, permission for 100% foreign ownership, simplified import and export procedures — and an income tax holiday on export profits.
Crucially, those benefits stayed in place for about two decades, until 2011. Companies could plan, invest and hire knowing the rules wouldn't change every budget.
Units didn't have to be in one physical park. Companies anywhere could register as STPI units and report their exports through the scheme. Today STPI-registered units account for roughly half of India's software exports.
Government worked hand in hand with industry. Nasscom, founded in 1988, became a trusted partner — shaping policy, publishing data and marketing "Brand India" abroad.
Later reforms built on the foundation: the IT Act of 2000 gave legal recognition to electronic transactions, and the SEZ Act of 2005 offered a new incentive regime as the STPI tax holiday wound down.

What Kenya should take from India: simple registration, incentives available to exporters wherever they operate, a strong partnership with industry — and above all, policy stability over many years.

Lesson 2 — The Philippines: make it easy to hire at scale

The Philippines had one big advantage in common with Kenya: a large, young, English-speaking workforce. It turned that advantage into an industry that earned around US$40 billion and employed about 1.9 million people in 2025.

Economic zones and IT parks. Since the mid-1990s, the Philippine Economic Zone Authority (PEZA) has registered IT parks and buildings where export-oriented firms receive tax incentives and fast, centralised approvals.
A shared roadmap with public targets. Government and IBPAP publish an industry roadmap — the current one aims for 2.5 million jobs and US$59 billion in revenue by 2028 — and report progress against it.
Reform that keeps pace with how people work. The CREATE MORE Act of 2024 lowered the corporate income tax rate for registered enterprises to 20% and explicitly allows IT-BPM firms in economic zones to have up to 50% of staff working from home without losing their incentives.
Focus on employability. The industry grew by hiring graduates at scale and training them on the job, with clear career paths from agent to team lead to manager.

The Philippines also shows a warning sign: some firms report that local governments interpret national incentives differently, creating confusion. Rules only work if they are applied consistently.

What Kenya should take from the Philippines: a public roadmap with jobs targets, incentives designed around hiring at scale, and rules that reflect hybrid and remote work.

Lesson 3 — The UAE: compete for companies and talent globally

The UAE isn't a mass IT-services exporter like India or the Philippines. Its lesson is different: how to make a country the easiest place in its region to set up, hire and grow a technology business.

Technology free zones. Dubai Internet City opened in 1999, followed by Dubai Silicon Oasis and dozens of other free zones across the country, offering 100% foreign ownership, fast company setup and clusters of technology firms.
Predictable, competitive tax. When the UAE introduced a federal corporate tax of 9% in 2023, it kept a 0% rate for qualifying free-zone income — protecting the incentives that had attracted companies in the first place.
Open doors to talent. Long-term "golden visas" are available to exceptional talent in digital technology, and the government has said it intends to offer 100,000 golden visas to programmers and AI specialists.
Speed and service. Company setup, visas and banking are designed to take days or weeks, not months.
Clear national ambition. The UAE appointed the world's first minister for artificial intelligence in 2017 and has set a goal of significantly increasing the digital economy's share of GDP.

What Kenya should take from the UAE: make it fast and easy for global companies to set up delivery centres in Kenya, and make it easy to bring in the senior talent that helps train and lead local teams.

Where Kenya's policies stand today

It's important to be fair. Kenya has several good building blocks:

Exported services are zero-rated for VAT, so exporters don't charge VAT and can reclaim the VAT they pay.
Export Processing Zones offer a 0% corporate tax rate for ten years and 25% for the next ten, and Special Economic Zones offer their own reduced rates.
Certified start-ups now enjoy corporate tax rates of 15% for three years and 20% for the next four, under the Finance Act 2025.
The Digital Superhighway programme has expanded fibre and digital skills, and a draft Digital Services Export Strategy (2026) sets the goal of making Kenya Africa's leading digital services exporter by 2031.

But four problems stand out.

Unpredictability. In July 2022, most exported services became subject to 16% VAT (BPO services were excluded); the change was reversed a year later. The Finance Bill 2024 was withdrawn after mass protests. Tax rules are changed almost every budget cycle. For a company planning a ten-year delivery centre, that uncertainty is a serious deterrent.
Zone-bound incentives. The strongest incentives are tied to physical zones. Most IT exporters are small and medium firms, or teams working from offices, co-working spaces or home — they can't easily benefit.
No incentive tied to jobs. Kenya has no scheme, like South Africa's Global Business Services incentive, that rewards companies for each new job created serving offshore clients.
Fragmented ownership. Responsibility is shared between several ministries, agencies and programmes, with no single body accountable for an IT export target.

Tax for people and companies: the hidden competitiveness gap

Incentives get the headlines, but two everyday questions often decide where a technology company sets up and where senior talent chooses to live: how much tax do people and companies pay — and how hard is it to file?

For individuals

	Kenya	India	Philippines	UAE
Top personal income tax rate	35%, on monthly income above KES 800,000	30%, plus surcharge and cess on high incomes	35%	0%
Income effectively tax-free	About KES 24,000 a month after personal relief	Up to ₹12 lakh a year under the new regime	First ₱250,000 a year	All employment income
Other deductions from pay	Social Health Insurance Fund 2.75%, Housing Levy 1.5%, NSSF 6% (capped)	Provident fund for many employees	SSS, PhilHealth and Pag-IBIG	Pension contributions for nationals only
Do salaried employees file their own return?	Yes — every PIN holder must file each year, even with nothing extra to declare	Yes, but largely pre-filled online	Usually not — the employer files on their behalf ("substituted filing")	No personal income tax return
Getting overpaid tax back	Claim through iTax, then wait for review — often slow	Calculated automatically when the return is processed and paid into the bank account	The employer refunds over-withheld tax at the year-end adjustment	Not applicable

Two things stand out for Kenya.

First, the top rate arrives early. A senior engineer, architect or delivery manager can easily earn above KES 800,000 a month, which means a 35% marginal rate — and with the health levy and housing levy on top, the effective marginal cost is close to 40%. Since December 2024 the housing levy no longer reduces taxable income. These are exactly the experienced people Kenya needs to lead export teams, and many of them are also being courted by the UAE, where they would pay no income tax at all.

Second, filing is a burden for everyone. Millions of salaried Kenyans whose tax is already fully deducted through PAYE must still log in and file an annual return, with penalties for filing late. The Philippines removes that burden for most employees through substituted filing: if you have one employer and your tax has been correctly withheld, your employer's year-end filing counts as yours.

For companies

	Kenya	India	Philippines	UAE
Standard corporate tax	30%	22% under the optional concessional regime (about 25% after surcharge and cess); 25–30% otherwise	25% (20% for smaller companies)	9% on profits above AED 375,000
Export or zone regimes	EPZ: 0% for ten years, then 25%; SEZ reduced rates; certified start-ups 15% then 20%	SEZ export-profit deductions (closed to new units since 2020)	Registered export enterprises can choose a 5% tax on gross income or enhanced deductions at 20%	0% on qualifying free-zone income
VAT/GST refunds for exporters	Exports are zero-rated, but refunds are slow: the processing period was extended from 90 to 120 working days in 2026, and MPs have flagged a backlog of around KSh 50 billion	Services can be exported without paying GST (under a Letter of Undertaking); 90% of a refund is paid provisionally within 7 days, the rest within 60 days — with 6% interest if late	Registered export enterprises can buy locally VAT-free (zero-rated); refund claims must be decided within 90 days	Refund requests typically processed within 20 business days and paid within 5 business days of approval
Compliance picture	Tax rules change most budget cycles; since January 2026, expenses not backed by an eTIMS e-invoice are disallowed	Faceless, largely digital assessments	CREATE MORE aimed to simplify incentives, though local interpretation varies	Relatively simple; corporate tax only since 2023

Kenya's 30% headline rate isn't unusual on its own. The real problems are that the attractive export regimes are tied to physical zones, that the rules change so often, and that compliance keeps getting more complex — the new eTIMS validation is good for formalising the economy, but for a small exporter it adds cost and risk at exactly the stage when it is trying to grow.

Refunds: where cash flow goes to die

For exporters, refunds matter as much as rates. Because exported services are zero-rated, an exporter charges no VAT on its sales but still pays VAT on rent, equipment, software and services it buys locally. That VAT is meant to come back as a refund. When refunds take months — or longer — the government is effectively borrowing working capital from the very companies it wants to grow. A backlog of around KSh 50 billion, and a longer legal processing period of 120 working days, send exactly the wrong signal to anyone considering Kenya as a delivery base.

India's approach is the clearest contrast: exporters can avoid paying the tax up front, most of any refund arrives within a week, and the tax authority pays interest if it is late. The UAE processes most refunds within a month. Speed and certainty of refunds are part of a country's competitiveness.

Thirteen policy changes Kenya should make

1. Pass a Digital Services Export Act with a stability guarantee

Give registered IT and digital services exporters a clear legal status and guarantee their key tax and incentive terms for 10–15 years, with grandfathering if the law changes. This single step would do more to attract investment than any new incentive. (Borrowed from India's two-decade STPI regime.)

2. Create a Kenyan "STPI": one registration, one window

Set up a single agency where exporters register once and receive licences, incentive certification, export reporting and support for work permits in one place — and make incentives available to registered exporters anywhere in Kenya, not only inside physical zones. (Borrowed from India's STPI and the Philippines' PEZA.)

3. Reward every new export job

Introduce a declining grant or payroll-tax credit for each new job serving foreign clients, with higher support for complex roles such as software engineering, data and AI, and extra support for young first-time employees. (Borrowed from South Africa's GBS incentive and the Philippines' hiring-led model.)

4. Write hybrid work into the rules

Allow registered exporters to have a large share of staff working remotely — the Philippines allows up to 50% — without losing incentives. This lets talent from every county participate, not just those in Nairobi. (Borrowed from the Philippines' CREATE MORE Act.)

5. Publish a national roadmap with an industry partner

Formally partner with a strong industry association to publish a five-year roadmap with public targets for export revenue and jobs, and report progress every quarter. What gets measured gets managed. (Borrowed from Nasscom in India and IBPAP in the Philippines.)

6. Open the door to senior talent

Offer fast-track, long-term permits for experienced technology leaders, architects and trainers who build and lead Kenyan teams — ideally linked to commitments to hire and train locally. Senior people create jobs for many junior ones. (Borrowed from the UAE's golden visa.)

7. Fund employability, not just training

Co-fund intensive "finishing school" programmes designed with employers, subsidise internationally recognised certifications, and measure every public skills programme by how many graduates are placed in export jobs. (Borrowed from the Philippines' employer-led training and India's industry–academia links.)

8. Build plug-and-play tech parks beyond Nairobi — with reliable power

Develop ready-to-use office space with reliable, competitively priced electricity and fibre in cities such as Mombasa, Kisumu, Nakuru and Eldoret, available to registered exporters of any size. (Borrowed from India's early STPI infrastructure and the Philippines' IT parks.)

9. Make Kenya a trusted home for global data

Global clients, especially in Europe and the UK, need confidence that their data is safe. Kenya's Data Protection Act (2019) is a strong start. Build on it with clear rules for cross-border data transfers, active enforcement, and recognition from key trading partners. (A lesson from every successful exporter: trust is part of the product.)

10. Sell Kenya actively — and make setting up fast

Create a dedicated service to attract Global Capability Centres, with a named contact who handles company setup, permits and banking in weeks. Train embassies and trade offices in the UK, US, Middle East and India to sell "Kenya Delivers" to technology buyers. (Borrowed from the UAE's investor-first approach and Brand India.)

11. Stop making salaried employees file returns they don't need

Introduce substituted filing: if a person has one employer and PAYE has been fully and correctly deducted, the employer's year-end return counts as theirs. Offer pre-filled returns for everyone else. This saves millions of hours, reduces penalties for honest taxpayers and lets the tax authority focus on real risks. (Borrowed from the Philippines and India.)

12. Offer a simple, competitive tax deal for exporters and the talent they need

Give registered services exporters — inside or outside zones — a low, simple rate on export income, such as a small tax on gross export revenue in place of complex calculations. Pair it with a time-limited, reduced PAYE rate for returning diaspora and specialist foreign talent who come to build and lead Kenyan teams, linked to local hiring commitments. The goal isn't zero tax — Kenya needs revenue — but a deal that is competitive, predictable and easy to comply with. (Borrowed from the Philippines' 5% gross-income option and the UAE's free-zone regime.)

13. Pay exporters' refunds fast — and pay interest when late

Create a fast-track refund lane for registered exporters: let them buy local inputs VAT-free where possible, pay most of any valid refund provisionally within days, settle the balance within a fixed period, and pay interest automatically when the tax authority is late. Clear the existing backlog on a published schedule, and let exporters offset verified refunds against other taxes they owe. Do the same for individuals: when PAYE has been over-deducted, refunds should be calculated and paid automatically. (Borrowed from India's GST export refunds, the UAE's refund timelines and the Philippines' 90-day rule.)

What Kenya should not copy

Learning from others also means avoiding their mistakes.

Don't build enclaves. Incentives that only work inside a few zones create islands of activity and leave most of the country out.
Don't bet only on voice BPO. Much of the Philippines' traditional work is exposed to AI automation. Kenya should aim from the start at software engineering, data, AI operations and domain-rich work in banking, insurance and healthcare.
Don't import talent instead of building it. The UAE's model relies heavily on foreign professionals. Kenya's strength is its own young people; foreign talent should be a catalyst, not a substitute.
Don't chase zero tax. The UAE can offer 0% personal income tax because of its other revenue sources. Kenya needs a broad tax base; the aim should be a competitive and predictable regime for exporters and their talent, not a race to the bottom.
Don't let incentives expire without a plan. When India's STPI tax holiday ended, the shift to other regimes caused real uncertainty. Every incentive needs a clear, long-term transition path.

A realistic timeline

In the first 100 days: announce a moratorium on tax changes affecting registered services exporters, name a single accountable agency, sign a roadmap partnership with industry, announce substituted filing for salaried taxpayers, and publish a schedule to clear the VAT refund backlog.

Within the first year: pass the Digital Services Export Act — including a simple tax regime for export income, a talent tax incentive and a fast-track refund lane with interest on late refunds — launch single-window registration, and start the job-linked incentive and finishing-school programmes.

By 2031: measure success by one number more than any other — export jobs created for young Kenyans — alongside export revenue.

Final thought

India, the Philippines and the UAE took very different paths, but their lessons point in the same direction: make it simple, make it stable, make tax competitive, easy to comply with and quick to refund, reward jobs, and sell the country to the world.

Kenya already has the young, English-speaking talent, the digital infrastructure and the ambition. What it needs now is a policy framework that exporters can trust for the next fifteen years — not the next budget.

The draft Digital Services Export Strategy is a good start. The real test will be whether the policies behind it are bold enough, stable enough and implemented quickly enough to turn Kenya's potential into jobs.

If you're a policymaker, business leader or investor working on Kenya's digital economy, which of these changes do you think matters most? I'd like to hear your view in the comments.

Sources: Nasscom, Technology Sector in India: Strategic Review 2026; Software Technology Parks of India (STPI), Ministry of Electronics and IT; IT & Business Process Association of the Philippines (IBPAP) and IT-BPM Industry Roadmap 2028; reporting by BusinessWorld, The Manila Times and Philstar on Philippine IT-BPM revenue and the CREATE MORE Act; US International Trade Administration, UAE Digital and ICT commercial guide; UAE government golden-visa programmes; World Bank (ICT service exports, 2024); PwC Worldwide Tax Summaries (Kenya, Philippines); Kenya Revenue Authority guidance on PAYE, statutory deductions and eTIMS, and analysis by Cliffe Dekker Hofmeyr; India's income tax slabs for FY2025-26 (Union Budget 2025); Philippine Bureau of Internal Revenue rules on substituted filing and the TRAIN and CREATE MORE laws; UAE Federal Tax Authority corporate tax and VAT refund rules; India's CGST Act provisions on export refunds (sections 54 and 56); reporting on Kenya's VAT refund backlog and the Finance Act 2026 by People Daily, Kenyans.co.ke and the Institute of Economic Affairs (IEA Kenya); PwC Philippines and BusinessWorld on VAT refunds under CREATE MORE; analysis of Kenya's VAT on exported services by EY, PwC Kenya and Andersen Kenya; Deloitte, BDO and KICTANet on Kenya's Finance Act 2025 and Significant Economic Presence Tax; Kenya's draft Digital Services Export Strategy (2026).