Legal forms of incorporation

Foreign investors are allowed to incorporate a sole director company and register a fully owned local company without having any local shareholder (source: The Companies Act 2015)

The most common corporate entities utilized by investors are:

Registered Companies (Private and Public)

The investor registers a new limited liability company. It is the main vehicle used by investors. The company is regulated by the Companies Act (2015). Taxation is made at the entity level.

Branch offices of companies registered outside Kenya

The foreign company –i.e. a company that has been incorporated outside Kenya- sets up a branch office in Kenya with the same legal status as the foreign company. A Certificate of Compliance will then be issued to the branch. Compared to local companies, foreign companies are subject to a higher corporate income tax rate (37.5% for branches of foreign companies instead of 30% for local companies).

Partnerships

A partnership is restricted to a maximum of 20 persons, each of whom is jointly and separately liable for all debts incurred (Partnership Act 1981). Taxation is made at the individual level.

Sole Proprietorships

Taxation is made at the individual level.

Co-operatives

Co-operatives are regulated under Cooperative Society’s Act.

Overview of setting up a business

Before starting her business, the foreign investor has to do the following:

Register the foreign company

The investor has to register her business with the Registrar of Companies

  1. From step 1, the investor will obtain a certificate of compliance for foreign companies/ or a certificate of incorporation for local companies.

 

Register with KenInvest

The investor has to apply to become a registered investor at the KenInvest offices (Eldoret, Mombasa, Nairobi, Kisumu). The investment has to exceed US$100,000.

A. Apply for an investment certificate

The applicant has to demonstrate that the investment will be beneficial to Kenya. The investment may for instance increase employment, increase government revenue, transfer technology, upgrade  skills etc.

B. Register for Tax and Social Security

1. Obtain a director’s Personal Identification Number (PIN) 

Upon completing the online form, the applicant will obtain a Kenya Revenue Authority acknowledgment receipt.

2. Obtain an investor facilitation, a PIN facilitation and an endorsement letter

It can be done at the KenInvest’s offices.

3. Submit documents for PIN processing at the Nation Income Tax Support Centre

The applicant can contract a Kenya Revenue Authority tax agent to submit the application

4. Obtain a National Social Security Fund (NSSF) employer registration

The applicant has to provide the following documents: NSSF application form, certificate of incorporation or compliance (for foreign companies), company PIN certificate and business permit.

It can be done at Huduma centres (one-stop centres for government services) or the NSSF offices.

5. Obtain a National Hospital Insurance Fund (NHIF) employer registration

The applicant has to provide the following documents: NHIF application form, certificate of incorporation or compliance (for foreign companies), company PIN certificate.

The application can be submitted to the NHIF offices.

Open a bank account

A number of international banks (e.g. Stanbic Bank, Barclays Bank of Kenya) have China banking desks. The investor is allowed to open a bank account after getting the foreign taxpayer registration ID.

Obtain a business permit from the City council (depending on the activity)

In Nairobi, investors have to (i) apply for business permit at the Nairobi City Hall (Annex building, Licencing Department) and (ii) register with the Nairobi self-service portal.

NB : If the investor constructs premises, the business permit will  be delivered as soon as the premises have been fully constructed and certified by the county government

Obtain an environmental impact assessment licence (depending on the activity)

Depending on the activity, the applicant may have to submit an environmental impact assessment to National Environment Management Authority (NEMA)