sebastian wichmann | berlin | 2 september 2015 · pdf filesebastian wichmann | berlin | 2...
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1 © Rödl & Partner 15.09.2015
Successful together
The Regulatory Regime- PPAs and IPP Leasing Models in Kenya
Sebastian Wichmann | Berlin | 2 September 2015
2 © Rödl & Partner 15.09.2015
Agenda
02 Tax impact – PPA vs Leasing
01 The Regulatory Process
03 Rödl & Partner
04 Contacts
3 © Rödl & Partner 15.09.2015
Agenda
02 Tax Impact – PPA vs Leasing
01 The Regulatory Process
03 Rödl & Partner
04 Contacts
4 © Rödl & Partner 15.09.2015
Power Purchase Agreements (PPAs) – Regulatory Regime
The Regulating Entities
Ministry of Energy & Petroleum
Energy Regulatory Commission (successor to Electricity Regulatory Board)
Kenya Power or private off-taker
Rural Electrification Authority
The Process - Licensing
• KPLC vs Industrial Off-taker – PPA and Generating Licence/Permit
5 © Rödl & Partner 15.09.2015
Land Rights – Leases and Licences
Greenfield projects – when acquiring land need to be aware of the designated land use
Agricultural land – ownership restricted
Other types of user depends on the owner for instance Kenya Forestry Service or Wildlife
Service.
Speculation prior to projects – need for confidentiality.
Private land – amalgamation of title
6 © Rödl & Partner 15.09.2015
Agenda
02 Tax Impact – PPA vs Leasing
01 The Regulatory Process
03 Rödl & Partner
04 Contacts
7 © Rödl & Partner 15.09.2015
The Tax Regime – PPA Model (IPP and Industrial Off-Taker)
Corporation Tax
Branch
Subsidiary
Transfer Pricing Issues
VAT (Solar contractors – Inputs VAT and Import Duty exempt)
Withholding Tax; Kenya – Germany DTA
Cash flow impact
Recent developments – Legal Notice No. 165 (August 2015) & Energy Bill 2015
8 © Rödl & Partner 15.09.2015
Tax Implications – Leasing Model
An IPP can opt to provide the entire power generation facility under an operating lease
or finance lease arrangement
Income Tax Act definitions - operating lease and finance lease
Resident vs. non-resident lessors
Tax benefits and positive cash flow impact
9 © Rödl & Partner 15.09.2015
Repatriation of Profits
Nature of payment Kenya-Mauritius DTA WHT rates Kenya-Germany DTA WHT rates
Dividends 5% 15%
Interest 10% 15%
Royalty 10% 15%
Repatriation of profits
As a branch
As a subsidiary
Tax efficient options
10 © Rödl & Partner 15.09.2015
Agenda
02 Power Purchase Agreements
01 Land Rights
03 Rödl & Partner
04 Contacts
11 © Rödl & Partner 15.09.2015
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12 © Rödl & Partner 15.09.2015
About Rödl & Partner in Africa
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13 © Rödl & Partner 15.09.2015
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