Kenya is considering a special tax system for employee share ownership plans (ESOPs) of start-ups in a bid to encourage innovation. The finance bill 2023 proposes a deferment of taxes on employee-allocated shares until after five years of share award or sale, with the taxable benefit to be based on the fair market value of the start-up's shares after five years or at the time of disposal. The regime will apply to start-ups incorporated in Kenya, with an annual turnover of less than Sh100 million ($731,255), have been in existence for less than five years, and are not formed due to splitting or restructuring of another or an existing business. The shift aligns with Kenya's plan to make the country an attractive business destination and Africa's top innovation centre.

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