For over a decade, Healy Consultants has efficiently and effectively assisted our Clients with i) Kenya company registration ii) business license requirement iii) corporate banking account and cash flow considerations iv) immigration related solutions v) work space solutions and v) employment strategies.
Advantages of Kenya company registration
Tax exemption through Export Processing Zones
- A Kenya company formation benefits from seven Export Processing Zones (EPZ) which offer export-oriented foreign companies 10 year tax exemption. The seven free zones are Nairobi, Athi River, Port of Mombasa, Kalifi, Malindi, Voi, and Kimwarer;
- Specifically, an EPZ enjoys i) a 10 year corporate income tax holiday ii) 10 year withholding tax holiday on repatriation of funds iii) indefinite exemption from VAT and customs import duty and stamp duty;
- Kenya company registration in EPZ allows the benefit of no exchange controls with easy repatriation of capital and profits, access to foreign currency accounts and domestic and offshore borrowing. Investment by foreigners in the Kenya business incorporation EPZ is unrestricted;
- Any Kenya business setup registered within an EPZ is exempt from all licensing requirements, with only a single EPZ license required to conduct business. The Kenya business incorporation EPZA also fast tracks any EPZ projects, ensuring approval and licensing within 30 days;
- The Kenya EPZs offer excellent export infrastructure, with ample amounts of serviced land and ready factory buildings. In addition, Zone developers provide 24 hour security, street lighting and landscaping. Office premises are also available for lease in most zones.
The preferred Eastern and Central African location
- Company documents are mostly available in English which makes company registration simple by saving translation costs and time;
- Kenya business setup allows easy availability of capital as Kenya is ranked as the 12th easiest in the world for obtaining credit in the 2013 Ease of Doing Business;
- Nairobi is the undisputed transportation hub of Eastern and Central Africa and the Port of Mombasa is the largest port in the region. The transportation infrastructure is superb, with high quality railways, airports, ports and roads, and further improvements, including a new port at Lamu, are planned for the next 3 years;
- Kenya company registration allows foreign entrepreneurs to take advantage of Kenya’s high projected GDP growth rate of 6%;
- The Nairobi Securities Exchange (NSE) is the third ranked exchange in Africa, and offers excellent investment prospects, having grown 61% in 2013 and with a price/earnings ratio more favorable than the majority of western stock exchanges;
- The transportation industry is also an excellent investment opportunity, growing by 23% from 2006 – 2010, making Kenya attractive for international construction companies;
- Kenya is active in several regional trade blocs, including the Common market for Eastern and Southern Africa (COMESA) and the East African Community (EAC). Also, Kenya has created a customs union with the EAC, eliminating all duties on goods and non-tariff trade barriers amongst member countries;
- Kenya is a member of The East African Community. Consequently, Kenya business setup allows extended judicial protection through the East African Court of Justice for international trade with Uganda, Burundi, Rwanda, Tanzania ;
A cheaper alternative to South Africa
Kenya company registration is a great alternative to South Africa for entrepreneurs looking to enter the African region, due to lower business setup costs:
- A Kenya company formation benefits from cheaper utilities, with basics costing an average of US$40 a month, compared to US$120 a month in South Africa. Mobile phone and internet plans are also significantly cheaper in Kenya;
- Kenya business setup allows entrepreneurs to benefit from cheap labor. In 2012, the average wage in Kenya was US$485, whilst the average wage in South Africa was US$1,675;
- Similar to South Africa, there is no minimum share capital requirement of an LLC;
- A top-class office space in Kenya would not cost more than US$11.5 per sqm while in South Africa would not be less than US$19 per sqm.
- English is one of Kenya’s two official languages, with an estimated 80% of the population able to speak English at a conversational level. Therefore, investors aiming for Kenya business setup will easily be able to communicate with employees, customers and suppliers;
- A resident company will benefit from 74% computer literacy among the population, which make the employees more productive;
- While skilled labor standards is of a poor quality compared to western countries, it is the second best on the continent after South Africa.
Disadvantages of Kenya company registration
- Non freezone Kenya business will require entrepreneurs to pay high taxes. Corporate income rate is 30%, witholding tax rate is 20% and a VAT rate is 16%;
- Kenya has signed mere 7 double taxation treaties which fail to materially reduce the tax burden of entrepreneurs.
- Obtaining a work permit requires entrepreneurs pursuing Kenya business setup to have at least US$100000 in a Kenyan bank account or an auditor’s report confirming that previously at least US$100000 were invested in the resident company;
- A Kenya company formation suffers from Government inefficiency. For example i) it takes 3 months to get immigration visas ii) 4 months to receive refunds of VAT and withholding taxes and iii) 1 month to obtain customs clearance;
- Kenya is ranked poorly as the 139th corrupt country on the 2012 corruption perceptions index. Any dealings with the Kenyan judicial system are mired by incompetence, executive interference and corruption through out all levels of the judiciary;
- Kenya company registration can also raise security and safety issues. Between Kenya’s relatively high crime rate and the instability in neighboring Somalia, investors will likely need to spend additional money on security and insurance when working in Kenya.
Company law challenges
- While a Kenya company formation can freely repatriate income out of Kenya, any transaction involving US$10,000 or more must be supported by documentary proof of the reason for the transfer;
- Kenya company registration can be time-consuming, requiring an average of 6 weeks to complete. In addition, depending on the industry, obtaining the proper licensing can take up to an additional 14 weeks to complete;
- A Kenya company formation will have difficulty acquiring land in Kenya, due to lack of transparency and cumbersome regulations within the Ministry of Lands;
- Kenya company registration laws restrict 100% foreign ownership in the following industries i) Aviation, where 51% Kenyan shareholding required ii) Insurance, where at least 33% Kenyan shareholding is required for agents and a minimum 60% Kenyan shareholding is required for brokers iii)Telecommunications, where at least 20% Kenyan shareholding must exist within three years of the issuance of the business license iv) Agriculture, where foreigners are barred from purchasing or selling any agricultural land v) Listed companies, where 25% of their ordinary shares must be reserved for investment by Kenyan nationals.
Wholly foreign owned entities
- Kenya business setup requires foreign entrepreneurs to form a limited liability company (LLC) with a minimum of 2 shareholders and 2 directors of any nationality. There are no minimum share capital mandates and company registration procedure can be completed within 6 weeks;
- Foreign entrepreneurs interested can also pursue a branch or a representative office through an limited liability. None of these entities require Kenyan nationals to be involved as shareholders or directors.
Different Kenya entities
Summary at a Glance
|Kenya Company Incorporation costs||US$4,750||US$5,900||US$5,600|
|Subsequent annual costs (excl accounting and tax fee)||US$2,950||US$2,950||US$2,950|
|How long to set the company up?||6 weeks||7 weeks||6 weeks|
|How long to open company bank account?||2 weeks||2 weeks||2 weeks|
|Issued share capital required||0||0||0|
|Is doing business permitted?||Yes||Yes||No|
|Allowed to sign sales contracts with Kenyan clients||Yes||Yes||No|
|Allowed to invoice Kenyan clients||Yes||Yes||No|
|Corporate tax payable||30%||37.5%||0%|
|Corporate bank account||SCB||SCB||SCB|
|Can rent local office premises||Yes||Yes||Yes|
|Tenancy agreement required before incorporation?||Yes||Yes||No|
|Allowed to import raw materials?||Yes||Yes||No|
|Allowed to export goods?||Yes||Yes||No|
|Can the entity hire expatriate staff?||Yes||Yes||Yes|
|Do you visit Kenya for company incorporation?||No||No||No|
|Resident director required?||No||No||No|
|Resident shareholder required?||No||No||No|
|Minimum number of directors||2||2||1|
|Minimum number of shareholders||2||2||1|
|Resident company secretary required?||Yes||Yes||No|
|Tax registration certificate required||Yes||Yes||No|
|Individual shareholders allowed||Yes||Yes||No|
|Corporate shareholders allowed||Yes||Yes||No|
|Corporate director(s) allowed||No||No||No|
|Public register of shareholders and directors||Yes||Yes||Yes|
|Kenya employment visa fees||US$4,950||US$4,950||US$4,950|
|How long to get work permit approved||3 months||3 months||3 months|
|Statutory audit required||Yes||Yes||No|
|Annual tax return to be submitted||Yes||Yes||No|
|Access to double tax treaties||Yes||Yes||Yes|
|Total Kenya company formation costs||USD10,040||USD11,190||USD10,890|
Private limited company
- This is the most common entity used. The Kenya business incorporation entity is separate from its owners who, as a result, enjoy limited liability;
- Entrepreneurs can wholly own a LLC with a minimum of 2 shareholders and 2 directors of any nationality. The business setup process for this entity can be completed within 6 weeks without the requirement on any initial share capital.
Kenya company registration laws stipulate that branch offices can be 100% foreign owned. The branch office is allowed to invoice local customers, sign local sales contracts and receive income from customers. However, the branch office will be required to obtain the necessary licensing for its industry of business.
While this can be 100% foreign-owned and controlled, but it is not permitted to make direct sales within Kenya. Such an office must only engage in activities such as i) promoting the business of the parent company and ii) market research. A local agent or distributor must be appointed to sell goods and provide services to local companies.
Export processing zones
Healy Consultants assist our international Clients with Kenya company formation in one of the following export processing zones: Nairobi, Athi River, Port of Mombasa, Kalifi, Malindi, in Voi, and Kimwarer.
Advantages of a EPZ company
- Kenya boasts seven Export Processing Zones (EPZ), offering export-oriented foreign companies 10 year tax exemption;
- Specifically, company formation in the form of an EPZ companies enjoy i) a 10 year corporate income tax holiday ii) 10 year withholding tax holiday on repatriation of funds iii) indefinite exemption from VAT and customs import duty and stamp duty;
- An EPZ Kenya business setup will face no exchange controls and can easily repatriate money from Kenya;
- Also, EPZ process requires only a single EPZ and company registration license approval to form a resident business. The EPZA also fast tracks the projects, ensuring approval and licensing within 30 days;
- The EPZs offer excellent export infrastructure, with ample amounts of serviced land and ready factory buildings. In addition, Zone developers provide 24 hour security, street lighting and landscaping. Office premises are available for lease in most zones.
Table comparing different free zones in Kenya
Summary at a Glance
Port of Mombasa
|Average annual Industrial space rent per 1000 sq ft||US$2,800||US$3,700||US$2,000||US$2,600|
|How long to set the company up?||10 weeks||10 weeks||10 weeks||10 weeks|
|How long to open company bank account?||2 weeks||2 weeks||2 weeks||2 weeks|
|Quality of Utilities||Average||Good||Poor||Average|
|Allowed to sign sales contracts with Kenyan clients||Yes||Yes||Yes||Yes|
|Allowed to invoice Kenyan clients||Yes||Yes||Yes||Yes|
|Corporate tax payable in Kenya||0%||0%||0%||0%|
|Corporate bank account||SCB||SCB||SCB||SCB|
|Physical office space required||Yes||Yes||Yes||Yes|
|Industrial space availability||Yes||Yes||Yes||Yes|
|Allowed to import raw materials?||Yes||Yes||Yes||Yes|
|Allowed to export goods?||Yes||Yes||Yes||Yes|
|Wholly foreign owned||Yes||Yes||Yes||Yes|
|Can the entity hire expatriate staff in Kenya?||Yes||Yes||Yes||Yes|
|Do you visit Kenya for company incorporation?||No||No||No||No|
|Minimum number of directors||2||2||2||2|
|Minimum number of shareholders||2||2||2||2|
|Tax registration certificate required||Yes||Yes||Yes||Yes|
|Individual shareholders allowed||Yes||Yes||Yes||Yes|
|Corporate shareholders allowed||Yes||Yes||Yes||Yes|
|Corporate director(s) allowed||No||No||No||No|
|Public register of shareholders and directors||Yes||Yes||Yes||Yes|
|LLC company allowed||Yes||Yes||Yes||Yes|
|Can apply for immigration visas||Yes||Yes||Yes||Yes|
|Annual audited financial statements||Yes||Yes||Yes||Yes|
|Annual tax return to be submitted||Yes||Yes||Yes||Yes|
|Access to Kenya double tax treaties||Yes||Yes||Yes||Yes|
Accounting and tax considerations
- Both resident and non-resident corporations are subject to income tax of 30% on taxable income;
- A Kenya company formation is liable to pay a VAT rate of 16% on goods unless incorporated within an EPZ, in which case the VAT rate is reduced to 0% indefinitely;
- The taxable income for a Kenya business setup is calculated on the audited accounting profit, as adjusted for tax purposes, for the accounting year ending in the preceding calendar year;
- Kenya boasts a mere 7 double taxation treaties which fail to materially reduce the tax burden of foreign entrepreneurs interested in Kenya company formation;
- Under corporate tax law, Kenya company formation is liable to pay withholding tax on the following types of payment made to a non-resident: interest, royalties, contract and other service fees, lease rentals (for movable property) and technical fees. The rates of withholding are 10%, 15% or 20% of the gross payment;
- Kenya business incorporation allows tax exemptions if setup within an EPZ. If in an EPZ, the Kenya business setup is tax exempt for the first 10 years, while paying a reduced corporate tax rate of 25% for every year after.
Kenya incorporation costs in Year 1 amount to US$6,750 and annual costs in Year 2 and thereafter amount to US$3,850. The average fee per Kenya engagement amounts to US$12,040 including company incorporation, company secretary, corporate bank account opening, VAT registration and estimated Government fees. Refer to draft invoice in the table below.
|1.||Average engagement costs||US$12,040||US$13,190||US$12,890|
The average Kenya company formation engagement period is 11 weeks as outlined below:
|1.||Engagement planning||1 week|
|2.||Company incorporation||6 weeks|
|3.||Corporate bank account approval||2 weeks|
|4.||Corporate internet banking approval||2 weeks|
|Total engagement period||11 weeks|
- According to the Companies Act, a Kenya company registration must have at least two directors who must be above 18 years;
- According to the Companies Act, a Kenya company formation must have at least two shareholders who must be above 18 years;
- Shareholders who wish to travel to Kenya to do business will be required to prove that US$100,000 in capital has been set aside for the Kenya business setup, as a requirement of a successful entrepreneur work permit application. This does not apply to shareholders who do not plan on travelling to Kenya;
- Each company must have a registered office in Kenya. Healy Consultants can provide this for monthly fee of US$1,450;
- Each time a change occurs in the particulars of the Kenya business setup or to its officers, the change must be lodged with the Kenyan companies registry;
- A Kenya company formation must file Annual Return with Company Registrar and Annual Tax Return with Revenue Authority to meet the legal requirements of the Kenya Companies Act;
- Not all sectors in Kenya business setup allow 100% foreign ownership. Foreign ownership is restricted in the aviation, insurance, telecommunications and agricultural industries, with listed companies also facing restrictions;
- The process of deregistering a company is dictated by the Government. This process will take a minimum of 6 months. Healy Consultants fee to project manage company de-registration is US$1450. During this 6 months period it is mandatory to maintain a resident company secretary and a legal registered office.
Recruitment in Kenya
- Recruitment of foreign labour requires the employer to justify the hiring of the foreign worker in place of a Kenyan. The foreign employee is expected, but not required, to have professional and educational qualifications relevant to the position;
- Citizens of the East African Community (Uganda, Rwanda, Burundi, Tanzania) can be hired more easily than employees from other countries, with a simplified application process for a special Class B work permit following Kenya company registration;
- When employing local or foreign workers, employers must make sure to stay compliant with the 2007 Employment Act and the 2007 Labour Relations act, which are the two main laws governing labour in Kenya. The new labour laws most resemble the English system of labour laws, in terms of employer responsibilities.
Licensing in Kenya
- To complete Kenya company formation, firms will be required to apply for a license for Kenya business setup. Read more about Kenya business setup licenses;
- Any Kenya business setup registered within an EPZ is exempt from all licensing requirements, with only a single EPZ business license required to conduct business.
Kenya employment visas
- To support Kenya company formation, Healy Consultants assists our Client obtains employment and residence visas from the Immigration Department of Kenya to allow them to live and work in Kenya following Kenya business setup. We are proud to say that our approval rate is still 100%. Healy Consultants fee to assist our Client obtain a work permit is US$4,950;
- The employment of foreign workers in Kenya is closely regulated, with a valid work permit required following Kenya company formation and Kenya business setup. A letter from the inviting organization is generally required for a foreign employment visa;
- Kenya only has visa-free agreements with the other members of the East African Community (Uganda, Tanzania, Burundi and Rwanda). However, a single entry visa allows for re-entry to Kenya from any of these countries without the need to apply for a multiple entry visa.
Entrepreneur visa (Class G)
- Entrepreneurs interested in Kenya company formation and Kenya business setup can apply for a Class G work permit in Kenya. This work permit allows entrepreneurs to live in Kenya and manage their business. A Class G work permit can only be applied for following Kenya company formation;
- A successful Class G work permit application requires the following from an applicant:
- Proof of being a shareholder in a Kenya incorporated company;
- Proof of sufficient capital to support Kenya company registration. Foreigners are required to show proof of at least US$100,000 in available capital, either from a Kenyan bank account statement showing said capital, or an auditors report showing that the applicant has invested said capital in to the Kenyan company;
- A list of directors of the Kenya business setup, issued from the Companies Registry;
- A tax PIN certificate of the applicant;
- Completed application form and payment of fees.
- If all conditions are successfully met, the application will likely be approved. The approval process may take from 2 – 6 months, depending on how frequently the Ministry of Immigration committee sits and the number of applications to be processed.
Employment pass (Class D)” visas
- A Class D work permit applies to investors, skilled workers, professionals, and senior management in companies. This permit allows foreigners to be employed at a Kenya business setup. This permit is more difficult to obtain, as the Ministry of Immigration looks to prevent companies from hiring foreigners where a Kenyan could fill the position;
- A successful Class D work permit requires the following from an applicant:
- A letter from the employer explaining why the applicant is most suitable for the position and why the job was offered to the applicant as opposed to a Kenyan. The letter should detail the applicant’s strengths, including their experience, training ability and qualifications;
- A signed copy of the applicant’s curriculum vitae;
- Originals and copies of the applicant’s educational and professional certificates;
- A completed application form, signed by the applicant and the employer.
- If all conditions are successfully met, the application will likely be approved. The approval process may take from 2 – 6 months, depending on how frequently the Ministry of Immigration committee sits and the number of applications to be processed.
Corporate banking options
International Banks in Kenya
Local Banks in Kenya
|Standard chartered||National Bank of Kenya|
|Citibank||Bank of Africa|
- Healy Consultants can open a local corporate bank account for a foreign company without having to set up a local company in Kenya. According to the Kenya Companies Act, a foreign company is only required to obtain a Certificate of Compliance from the Companies Registry in order to warrant corporate bank account approval;
- Banks in Kenya provide the full range of corporate account facilities including multiple currencies, internet banking, telephone banking, checking accounts, savings accounts, debit and credit cards, and wealth management services;
- To receive the best internet banking and customer service for Kenya business setup, Healy Consultants recommends using the services of international banks Standard Chartered and Citibank for most bank account solutions for Kenya company formation. Local banks can be used where appropriate for the Kenya business setup;
- Healy Consultants can open an international bank account within 3 — 4 weeks of Kenya company formation and Kenya business setup. There is a chance that the Client will have to travel in order to open the account, though Healy Consultants makes every effort to minimize the probability. Following bank account approval, the preferred bank will directly and independently email our Clients the account number;
- To support Kenya business setup and Kenya company registration, Healy Consultants assists Clients with trade finance tasks following Kenya company formation and Kenya company registration including i) bank guarantees ii) letters of credit iii) finance against trust receipt iv) document against payment and against acceptance;
- Healy Consultants assists in securing corporate finance in the form of a loan, overdraft or simply preferential credit terms and other corporate banking related aspects of Kenya company formation and Kenya business setup.
Success tips when doing business in Kenya
- When greeting someone elder or of higher status, grasp the right wrist with the left hand while shaking hands to demonstrate respect. In addition, lowering your eyes while greeting someone older further shows respect;
- Skipping or rushing the initial greeting and handshake is considered poor manners. It is also expected of potential business partners to inquire about each other’s families before beginning business discussion;
- Direct and frank communication is not the norm in Kenya. Kenyans will always attempt to qualify what they say so that the message is delivered in a sensitive way. Saving face is very important to Kenyan business persons;
- Business persons should be careful to avoid blunt statements, choosing instead to deliver such statements through metaphors, analogies or stories;
- Kenyans pride themselves on their emotional stability and expect the same of others. Entrepreneurs interested in Kenya company formation should take care to avoid showing anger during business situations, even during disagreements;
- Meeting schedules greatly depend on the nationality of the shareholders. British and Indian owned companies will likely have a meeting agenda, which will be used and strictly followed. Kenyan owned companies are more likely to take a relaxed attitude towards meeting schedules, with meetings often lasting much longer than initially expected;
- Because Kenyan companies are not all well versed with international trade, we encourage our Clients to consistently use and sign contracts of service.
Did you know about Kenya?
- There are over 48 African languages spoken in Kenya, with as many ethnic groups with their own unique culture;
- As Kenya was once a British colony, English is one of the official languages with UK vocabulary and spellings used;
- Kenya is renowned as a dominant force in the middle length Olympic track events. Kenya has taken gold in the 3,000 m steeplechase in every non-boycotted Olympic games since 1968;
- Kenya has recently developed a detailed and coherent plan for their socioeconomic future called Vision 2030. This plan is expected to reform Kenya;
- As Kenya is located on the equator, temperatures can reach in to the 40s, especially in western Kenya and the bushlands of northern Kenya. The Rift Valley and Central Highlands experience much more agreeable weather, with temperatures between 22 to 28 degrees year round;
- Kenya is well known for its fauna, with wild lions, buffalo, leopards, elephants and rhinoceros all present in Kenya;
- The largest contributor to Kenyan electricity is hydroelectric power;
- Lake Victoria, the second largest lake in the world, is located along the western border of Kenya;
- Kenya is at the forefront of the African technology boom. 41% of the population are connected to the internet, with 14% becoming connected for the first time in 2012. 99% of internet connections in Kenya are by mobile phone;
- Kenya is ranked 145th out of 182 countries, according to the United Nations Human Development Index (HDI). The report rates a country on its overall life expectancy, literacy, education and living standards. This HDI ranking classifies Kenya in the low human development quadrant;
- Kenya is negatively perceived as the world’s 139th least corrupt country, according to the 2012 Corruption Perceptions Index by Transparency International, a global measure of corruption amongst public officials and politicians;
- Kenya is positively ranked as the 106th most competitive economy in the World Economic Forum’s Global Competitiveness Report 2012 – 2013;
- According to a Trading Economics study, From 1999 until 2011, Kenya Unemployment Rate averaged 22.4% from 1999 until 2011, reaching in December 2011 a record high of 40% and a record low of 12.7% in December 2006;
- The total population in Kenya represents 0.60 percent of the world´s total population, which means that one person in every 168 people on the planet is a resident of Kenya.
- Kenya FAQs
- Kenya Revenue Authority
- Central Bank of Kenya
- Stock Exchange
- Chamber of Commerce & Industry
- Kenya airports
- Deloitte Kenya highlights 2014
- Kenya Highlights
- Know Your Taxes – East Africa Tax Guide 2013/2014
- Kenya – Preferred Entry Point to East Africa
- KPMG – Kenya Country Profile
- Kenya Income Tax Act
- Doing Business in Kenya
- Deloitte – Step by Step Income Tax Kenya
The following are some of the most frequently asked questions about Kenya company formation:
How many directors are required for starting a business in Kenya?
A minimum of 2 directors are mandated when registering a company in Kenya.
How many shareholders are required for registering a company in Kenya?
For business registration in Kenya, 2 shareholders will need to be appointed.
Is it mandatory to have a resident director or shareholder for Company Registration in Kenya?
No. A Kenya company is not required to appoint resident directors or shareholders.
How to register a business in Kenya?
For business registration, our Client will be required to i) reserve the company name ii) supply the Kenya office lease agreement iii) sign the company setup forms iv) register for tax and social security and v) obtain a business license.
Healy Consultants’ experts are Kenya company registration specialists and will assist our Clients at every step.
Can Healy Consultants assist my firm with Kenya subsidiary company registration?
Yes. Our Kenya company registration services include i) business registration ii) business license registration iii) immigration solutions iv) employment strategies v) business banking solutions and vi) office rental requirements.