Kenya company registration

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Kenya company registration

DOING BUSINESS IN KENYA

Since 2003, Healy Consultants has assisted our Clients with registering their business in Kenya. We can provide the following services to both individual entrepreneurs and multinational corporations: i) Kenya business registration ii) advisory services and assistance to comply with licensing requirements iii) nominee services for Kenya resident directors iv) corporate bank account opening in Kenya v) visa strategies and vi) office rental solutions. Please press the links on the headings below to read more information on the advantages and disadvantages of establishing a company in Kenya.

SummaryTax resident LLCTax resident PLCLLPBranch companyEPZ company
Best use of company?Global trading companyStock exchange listingProfessional servicesShort-term projectsManufacturing
Legally tax exempt if properly structured?NoNoNoNoYes
Corporate bank account location?Barclays Bank KenyaStandard CharteredABC BankEcoBankKCB
Client must travel to Kenya?NoNoNoNoNo
Can secure trade finance?YesYesYesYesYes
Limited liability entity?YesYesYesNoYes
VAT payable on sales to local customers16%16%0%16%16%
Withholding tax on payments to shareholders?0%0%0%0%0%
Average total engagement costs?US$13,750US$16,850US$13,750US$14,150US$17,200
Average total engagement period?16 weeks17 weeks15 weeks16 weeks17 weeks
Accounting and tax considerationsTax resident LLCTax resident PLCLLPBranch companyEPZ company
Statutory corporation tax payable?30%30%30%30%0%
Must file an annual Kenya tax return?YesYesYesYesYes
Must file annual financial statements?YesYesYesYesYes
Investment income is legally tax exempt in Kenya?NoNoNoNoYes
Access to double taxation treaties?YesYesYesYesYes
This entity enjoys Government incentives?YesYesYesYesYes
VAT reporting to the Government every month?YesYesYesYesYes
Legally tax exempt entity?NoNoNoNoYes
Dividends received are legally tax exempt?YesYesYesYesYes
Withholding tax on payments to non-residents?10%10%0%10%0%
Company registrationTax resident LLCTax resident PLCLLPBranch companyEPZ company
Resident director required?NoNoNoNoNo
Kenya shareholder/partner required?YesYesNoYesNo
Minimum number of shareholders/partners?272Parent company2
Minimum number of directors?12211
Minimum paid up share capital?US$2US$7US$2NAUS$2
Shelf companies available?YesYesNoNoNo
Time to incorporate a new entity?4 weeks4 weeks6 weeks4 weeks5 weeks
Can easily convert to a local PLC company?YesYesNoNoYes
Can have preference shareholders?YesYesNoNoYes
Business considerationsTax resident LLCTax resident PLCLLPBranch companyEPZ company
Can invoice local customers?YesYesYesYesYes
Can hire local staff?YesYesYesYesYes
Can rent local office space?YesYesYesYesYes
Secures a residence visa for business owner?YesYesNoNoYes
Good entity for trademark registration?YesYesNoNoYes
Other useful informationTax resident LLCTax resident PLCLLPBranch companyEPZ company

Kenya has signed free trade agreements?Yes, see this page
This country is a member of WIPO and TRIPS?Yes
The country is a member of the ICSID?Yes
Average customs duties suffered?25%
Government foreign investment approval is required?In certain sectors
Average monthly office rental? (US$ per sq m)US$12
Minimum statutory monthly salary?US$200
Average monthly US$ salary for local employees?US$900
Kenya shillings deposit interest rate?6.64%
Overseas remittance currency controls?None
Public register of shareholders and directors?Yes
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Very Good
Crowd funding available in this country?Yes

The recently launched Huduma Centres, Kenya’s ‘One-Stop Shops’ to access government services, enables entrepreneurs to easily reserve a company name and receive stamp duty assessment. Other government agencies involved in the completion of a new company incorporation include i) the Registrar of Companies at Attorney General’s Office and ii) the Kenya Revenue Authority;

The Kenya Companies Act 2015 provides for various corporate structures including;

  • A private limited liability company: this entity is the most preferred by foreign entrepreneurs and investors looking to do business in the country and is suitable for small and medium sized establishments;
  • A public limited company: this legal entity is preferred by investors looking to establish large corporations with the intentions of listing the same on the Nairobi Stock Exchange;
  • A limited liability partnership: this type of entity is perfect for individual skilled professionals including lawyers and consultants looking to establish a partnership;
  • A branch office: foreign companies looking to do business in Kenya without setting up a subsidiary will find this entity the best establishment for their intended venture in Kenya;
  • Representative offices: Although not provided for in the companies act, foreign banks looking to setup representative offices in Kenya may also do so by directly applying though the Central Bank of Kenya.

Benefits and problems of registering a company in Kenya

Press the link headings below to read detailed, relevant, up to date information.

  • Benefits and problems

    Benefits of Kenya company registration

    Tax exemption through Export Processing Zones

      Kenya business registration advantages

    1. Registering a company in Kenya is easy as only i) two shareholders ii) two directors and iii) a minimum paid up capital of US$2 (KES2) are required for this purpose. The company can be incorporated and registered for tax within one month and our Clients do not need to travel during the engagement;
    2. We recommend to our Clients interested to form a company in Eastern Africa to consider Kenya because:
      • Company documents are available in English, which makes registration of a Kenyan company simple and saves translation costs;
      • 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. Further improvements, including a new port at Lamu, are planned for the next 3 years;
      • Kenya is an emerging economy, expected by the International Monetary Fund to grow at approximately 7% per year until the end of the decennia. It also has a large population of 42 million;
      • 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, allowing extended judicial protection through the East African Court of Justice for International Trade with i) Uganda ii) Burundi iii) Rwanda and iv) Tanzania.

    3. Our Clients forming a manufacturing company in Kenya are often interested to run their operations from an export processing zone because:
      • The Kenyan authorities have created seven Export Processing Zones (EPZ) which offer export-oriented foreign companies: i) exemption from corporate income tax and withholding tax during up to ten years and ii) exemption from VAT and customs import duty and stamp duty;
      • Registering a company in a Kenyan EPZ also allow our Clients to benefit from exemption from currency exchange controls, access to foreign currency corporate bank accounts and domestic and offshore borrowing;
      • Any company registered within an EPZ can operate with a single license. The Kenya Export Processing Zones Authority also fast tracks EPZ projects, ensuring approval of the license within 30 days;
      • The Kenyan EPZs also 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.

    4. Kenya is a great alternative to South Africa for entrepreneurs looking to enter the African region, due to lower business setup costs:
      • A Kenya company 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 2014, the average wage in Kenya was US$485, whilst the average wage in South Africa was US$1,675;
      • A top-class office space in Kenya would not cost more than US$11.5 per sq. m. while in South Africa would not be less than US$19 per sq. m.

    5. Our Clients will also enjoy the following benefits when employing locals in Kenya:
      • 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 will easily be able to communicate with employees, customers and suppliers;
      • The computer literacy among the population is 74%, which makes 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.

    Problems with Kenya company registration

    1. Non free zone Kenya businesses are subject to significantly high taxes. Corporate income tax rate is 30%, withholding tax rate is 20% and VAT rate is 16%. Kenya has also signed only 7 double taxation treaties, which fail to reduce the tax burden of foreign entrepreneurs;
    2. Kenyan 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;
    3. Doing business in Kenya presents the following challenges:
      • Obtaining a work permit requires entrepreneurs pursuing Kenya business setup to have at least US$100,000 in a Kenyan bank account or an auditor’s report confirming that previously at least US$100,000 were invested;
      • Kenya suffers from government inefficiency. It takes an average of i) 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;
      • A Kenya company also raises 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;
      • While a Kenya company 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;
      • Foreigners will have difficulties acquiring land in Kenya, due to lack of transparency and cumbersome regulations within the Ministry of Lands.

  • Best uses for a Kenya company

    1. Business process outsourcing: Kenya’s low labour costs, English-speaking population and good educational standards make it an increasingly popular destination for business process outsourcing.

      Being in the UTC+3:00 time zone, Kenya can serve both Europe and the Middle East on more convenient hours than other popular BPO locations like India.

      Konza Technology City will provide office space, infrastructure and incentives to business process outsourcing companies when it is complete. KTC is being built as part of Kenya’s Vision 2030 initiative.

Contact us

For additional information on our company registration services in Kenya, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Kunal Fabiani, directly:
client relationship officer - Kunal