Kenya has a mixed legal system which comprises of the Constitution of Kenya, statutory (written) law, certain Acts of Parliament of the United Kingdom, the English common law, doctrines of Equity, international laws ratified by Kenya, customary law and Islamic law.

Country overviewKenya flag


Estimated to be 47.6 million people


Uhuru Muigai Kenyatta (since 9 April 2013)

Capital city

Nairobi - estimated to be 3.9 million people

Major cities

Mombasa (1.2 million people), Kisumu (1.0 million people), Nakuru (0.3 million people)

Major industries

Small-scale consumer goods (plastic, furniture, batteries, textiles, clothing, soap, cigarettes, flour); agricultural products; horticulture; oil refining; aluminium; steel; lead; cement; commercial ship repair; and tourism.


Kenyan Shilling


English (official), Kiswahili (official), numerous indigenous languages

Major religions

Christian 83% (Protestant 47.7%, Catholic 23.4%, other 11.9%), Muslim 11.2%, Traditionalists 1.7%, other 4.1%.

Legal information

Capital markets
Current number of listed companies



Nairobi Securities Exchange - visit website here.

Listing Rules

Listing Regulations can be downloaded here.

Principal Legislation

Capital Markets Act and Central Depositories Act

Regulatory body or bodies

Capital Markets Authority - visit website here.

Takeover / Merger regulations

You can download the full Takeover/Merger Regulations document here.

Competition regulation
Impact of Regulatory Regime on Business
Mergers and Takeovers

Download the Competition Act 2010 here

Under the Competition Act, any merger or takeover, whether of the whole or a portion of a business, will require the prior approval of the Competition Authority (“the Authority). However, based on the value, the Authority may consider a particular transaction for exemption from certain notification requirements. Mergers that may be considered for exemption include:

  • any mergers where the combined turnover or assets of the merging parties is between one hundred million Kenya Shillings and one billion shillings Kenya Shillings;
  • in the healthcare sector, where the combined turnover or assets of the merging parties is between fifty million shillings and five hundred million shillings; or
  • if the proposed merger relates to the carbon based mineral sector, where the value of the reserves, the rights and associated exploration assets are less than four billion Kenyan Shillings.
Unwarranted concentrations of power

The Competition Act gives wide ranging powers for the Authority to order any person holding an unwarranted concentration of economic power to dispose of such a portion of their interest as is necessary to eliminate the unwarranted concentration. Although, as yet, there are no records of this power being exercised, this presents a risk.


The Competition Act repealed the Restrictive Trade Practices, Monopolies and Price Control Act, CAP 504 of the Laws of Kenya. It empowers the Minister to make rules to give better effect to its provisions. However, at the time of writing no rules have been issued by the Minister.

The Competition Act encapsulates both competition laws and provisions dealing with consumer rights, and established the Authority whose principal functions include applying, promoting and enforcing compliance with the Act. It also established the Competition Tribunal which hears appeals from decisions of the Authority.

The Act covers among others:

  • restrictive trade practices;
  • mergers and takeovers;
  • unwarranted concentrations of economic power; and
  • consumer welfare.
Corruption / transparency
Corruption Perception Index rank worldwide for 2017 by Transparency International


Corruption Perception Index score for 2017 by Transparency International


Ratified the United Nations Convention Against Corruption?


Signatories to the African Union Convention on Preventing and Combating Corruption?


Signatories to the African Union Convention on Preventing and Combating Corruption?


Signatories to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions?


Signatories to United Nations Convention against Corruption (UNAC)?


UNAC Ratified?



Kenya has adopted the United Nations Commission on International Trade Law (UNCITRAL) model of arbitration.

Kenya has also established the Nairobi Centre for International Arbitration (NCIA) for promotion of international commercial arbitration and other alternative forms of dispute resolution.

The Chartered Institute of Arbitrators (link provided below) has a Kenyan branch for promoting the facilitation and determination of disputes by arbitration or other forms of Alternative Dispute Resolution.

The Chartered Institue of Arbitrators

Effectiveness of the Court System

While a backlog of cases has been reported, and sometimes long waiting times for cases, the Kenyan Court system is generally effective.

Enforcement of arbitral awards

Kenya is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958.

Under the Arbitration Act 1995, arbitral awards are widely enforceable in Kenya irrespective of the country in which the award was made, but an application to the Kenyan courts is mandatory.

Enforcement of foreign judgments

Judgments of the superior courts of the following countries are recognised and enforceable in Kenya:

  • United Kingdom;
  • Australia;
  • Malawi;
  • Seychelles;
  • Tanzania;
  • Uganda;
  • Zambia; and
  • Rwanda.

The judgment needs to be registered within six years of the date of the judgment.

Visit the judiciary website's homepage here.

Structure of the court system

The court system has four levels:

  • The Supreme Court of Kenya: the highest court which determines disputes relating to presidential elections, provides advisory opinions and deals with appeals from the Court of Appeal. Its decisions are binding on all courts;
  • The Court of Appeal: has jurisdiction to hear appeals from the High Court and any other court or tribunal as prescribed by an Act of Parliament;
  • The High Court: has supervisory jurisdiction over the subordinate courts, and over any person, body or authority exercising a judicial or quasi-judicial function. It also has unlimited original jurisdiction in criminal and civil matters, and has jurisdiction in determining the question of whether a right or fundamental freedom in the Bill of Rights has been denied, violated, infringed or threatened. There is also the Employment and Labour Relations Court which, together with the Environment and Land Court, have an identical status to the High Court. These courts were established specifically to hear and determine disputes relating to employment and labour relations, and the environment and the use and occupation of, and title to land respectively; and
  • The Subordinate Courts: primarily deal with small claims and are known as the Magistrate Courts.
Foreign investments
Export Processing Zone

The creation and regulation of Export Processing Zones in Kenya is governed by the Export Processing Zones Act, Cap 517. The main purpose of this legislation is to facilitate the establishment of Export Processing Zones in Kenya with the aim of promoting export oriented investments through the creation of an enabling environment.

The Act can be downloaded here.

Under this Act, there are various regulations whose purpose is to give effect to specific provisions of the Act. These regulations include:

  • The Export Processing Zones Regulations, 1991;
  • The Export Processing Zones (Fees) Regulations, 1994;
  • The Export Processing Zones ( Business Services) Regulations, 2004.
Special Economic Zone

The creation and regulation of Special Economic Zones in Kenya is governed by the Special Economic Zones Act, No. 16 of 2015. The main purpose of this legislation is for the promotion and facilitation of global and local investors, the development and management of enabling environment for such investments, and for connected purposes.

This Act can be downloaded here.

The Special Economic Zones Regulations, 2016 have been passed to give effect to its provisions of the Act.

Foreign Investment Incentives

Foreign nationals proposing to invest in Kenya may apply to the Minister for a Certificate of Approved Enterprise (“Certificate”) under the Foreign Investments Protection Act, CAP 518 Laws of Kenya. The Certificate entitles the holder to transfer out of Kenya the capital specified in the Certificate as well as the principal and interest of any loan specified in the Certificate. The transfer must be made in the currency specified in the Certificate or of the profits (after tax) arising from the investment.

Foreign Investor Rules

There are very few restrictions on foreign ownership in Kenya. For example, there are no restrictions on non-Kenyan residents or citizens owning shares in a private limited company incorporated in Kenya.

However, the following areas are affected:

  • Aviation: foreign Investors are allowed to control up to 49% of the voting rights of a corporation or partnership in the aviation industry
  • Insurance: a minimum of one third of the paid-up capital of an insurer should be owned by Kenyan citizens or the Kenyan Government
  • Telecommunications:within three years of a telecommunications licence being issued, at least 20% of the company's shares must be owned by Kenyan citizens;
  • Mining: there must be least thirty five per cent (35%) local equity participation for the grant of a mineral right licence. In addition, the grant of permits for small scale operations are only provided to Kenyan citizens or body corporates in which at least sixty per cent (60%) of the shareholding is held by Kenyan citizens; and
  • Land: non-Kenyans cannot own agricultural land, however, a non-Kenyan citizen may apply to the Kenyan President for an exemption; there are no restrictions on ownership of non agricultural land (including commercial or industrial properties) by non-Kenyans.

You can download the full Alcoholic Drinks Control Act 2010 here.


The main piece of Legislation that provides a framework for the regulation of the Aviation Industry is the Civil Aviation Act, No. 21 of 2013. Under the Act, there are various regulations whose purpose is to provide for specific rules governing various aspects of the aviation industry.

These Regulations can be downloaded here.


Section 55 of the Competition Act Number 12 of 2012 guards the welfare of consumers by making it an offence to make false or misleading representations about goods or services.

Constitution and Consumer Protection

Article 46(1) of the Constitution of Kenya, 2010 protects consumers’ rights to receive the information necessary for them to gain full benefit from goods and services.

Additionally, there is the Consumer Protection Act of 2012 which:

  • sets out consumers’ rights and obligations vis-a-vis product and service liability;
  • makes provisions for the promotion and enforcement of consumer rights;
  • empowers consumers to seek redress for infringement of their rights as consumers; and
  • provides for compensation.

The Act established the Kenya Consumers Protection Advisory (CPA) Committee to aid the formulation of policy related to consumer protection, accredit consumer organisations, advise consumers on their rights and responsibilities, investigate complaints and establish conflict resolution mechanisms, amongst other duties.

A breach of any regulation made by the CPA, will result in a person being liable for a fine not exceeding five hundred thousand shillings, imprisonment for a term not exceeding two years, or both such fine and imprisonment.


There are two main Acts which regulate the insurance industry in Kenya.

The main, overall legislation is the Insurance Act, CAP 487 Laws of Kenya which regulates the industry generally.

Under the Insurance Act, there are various regulations, including:

  • The Insurance Regulations;
  • The Insurance (Statistics) Regulations;
  • The Insurance (Insurance Appeals Tribunal Rules) 2013; and
  • The Insurance (Policyholders Compensation Fund) Regulations.

The second piece of legislation governing the insurance industry in Kenya is the Insurance (Motor Vehicle Third Party Risk) Act which focuses purely on insurance covering risk of road accidents involving motor vehicles and which makes it mandatory that every motor vehicle have a third party risk cover.

The Act can be downloaded here.


There are various pieces of Legislation that govern ownership, registration and dealings in land, including:

The Land Act, 2012: This Act was issued to harmonize the numerous Land Laws that were previously in effect in Kenya and to regulate the management and administration of land and land based resources.

The Land Act can be downloaded here.

The Land Registration Act, 2012: The main purpose of this Act is to provide for a single legislation that governs the registration of interest in land in Kenya.

The Land Registration Act can be downloaded here.

The Land Adjudication Act, Cap 284: The purpose of this Act is the ascertainment and recognition of rights relating to community land.

The Land Adjudication Act can be downloaded here.

The Land Control Act, Cap 302. This Act governs transactions in Agricultural land.

The Land Control Act can be downloaded here.

The Community Land Act, 2016: This Act focuses on the recognition, protection and registration of community land rights in Kenya.

The Community Land Act can be downloaded here.

Land Laws (Amendment) Act, 2016: The Act brings about amendments to the Land Act, 2012, Land Registration Act, 2012 and the National Land Commission Act, 2012. The amendments were necessary to correct errors and inconsistencies in the statutes and to clarify certain definitions.

Of key to note is that with the amendments, spousal consent is no longer an overriding interest in land although it is still a mandatory requirement for any dealings in matrimonial property. Equally, joint ownwership of land is now open to parties who are not spouses. The act can be downloaded here.


The main piece of legislation that governs the pharmaceutical industry in Kenya is the Pharmacy and Poisons Act, Cap 244 whose main purpose is the regulation of the pharmaceutical profession as well as the control of manufacturing, trade, and distribution of pharmaceutical products.

The Pharmacy and Poisons Act can be downloaded here.


The Anchor Legislation governing the telecommunication industry in Kenya is the Kenya Information and Communications Act, Cap 411A. It provides a regulatory framework under which the operations of telecom service providers are regulated.

The Act can be downloaded from: Kenya Information and Communications Act, Cap 411A.

Under the above Legislation, there are numerous regulations that regulate various niche aspects of the telecommunications industry. Some of these regulations include:

  • The Kenya Communications Regulations, 2010;
  • The Kenya Communications (Appeals) Rules; and
  • The Kenya Information and Communications (Dispute Resolution) Regulations, 2010.
Capital Deductions

Investment deduction for qualifying investments: qualifying investments relate to the purchase and installation of machinery used in manufacturing.  This also extends to machinery for electricity generation, waste disposal and clean-up, as well as water supply and disposal machinery.

Industrial building allowance: 10% - 50% for qualifying building.  Qualifying buildings include industrial buildings in which manufacturing machinery is installed and hotels.

Plant and machinery (reducing balance): 12.5% - 37.5%

Mining specified minerals:

  • Year 1: 40%; and
  • Years 2 to 7: 10%.
Capital Gains Tax

Capital Gains Tax is charged on gains made from transfers of property at the rate of fiver per cent (Schedule 8 of the Income Tax Act).

Corporation Tax

30% for resident companies (a direct tax on the tax adjusted profits of a company).

A resident company is one:

  • which is incorporated in Kenya under Kenyan law
  • whose management and control of its affairs were exercised in Kenya in a particular year of income under consideration or
  • declared by the Minister in a notice in the Kenya Gazette to be a resident for any year of income.

Depreciation is not allowable for tax purposes however, capital allowance on plant and machinery and industrial buildings is available.

The Corporation Tax rate is 37.5% for non-resident companies.


Taxed at 5% for residents.

Under the Income Tax Act, a resident, when referring to an indivual, is defined as a person who.:

  • possessed a permanent home is in Kenya for a period in the particular year of income under consideration; or
  • has no permanent home in Kenya but was present for an aggregate of 183 days or more in the particular year of income under consideration; or
  • has no permanent home in Kenya but was present for an aggregate of 122 days for the income year under consideration and each year for the previous two years.

When referring to a body of persons, a resident is where such a body is:

  • incorporated in the Republic of Kenya;
  • the management and affairs of the body are run from Kenya; or
  • declared as a resident by the Cabinet Secretary in the Kenya Gazette.

Taxed at 10% for non-residents.

Exemption for resident companies holding more than 12.5% shareholding in a resident company.

Foreign sourced dividends are not taxed in Kenya.

Double Taxation Treaties

Kenya has double taxation treaties with:

  • United Kingdom
  • Germany
  • Canada
  • Norway
  • Denmark
  • Sweden
  • Zambia and
  • India.
Exchange Control

There are currently no exchange control restrictions applicable in Kenya. The Exchange Control Act, which imposed exchange controls, was repealed in 1995.  Howver, foreign payments need to be made through commercial banks.

Export Processing Zone

Section 29 (2) of the Export Processing Zones Act provides for various tax exemptions, including from the following:

  • registration under the Value Added Tax Act;
  • the payment of Excise Duty;
  • the payment of Income Tax for the first 10 years;
  • the payment of Income Tax limited to 25% for the next 10 years following the initial 10 year exemption;
  • the payment of withholding tax on dividends and other payments made to non-residents for the first 10 years of operation;
  • the payment of stamp duty on the execution of any instruments relating to the business activities of an Export Processing Zone enterprise.
Foreign Tax Relief

Limited only to countries with double taxation.


Witholding tax is chargeable on interest earned as follows:

  • interest received from a financial institution – 15%;
  • interest earned on bearer certificates: - 25%; and
  • interest earned on bearer bonds: - 10%.

Tax losses can be carried forward for 10 years, inclusive of the year in which the loss was incurred. The loss can only be set off against income from the same specific source and is not transferable from one entity to another.

Personal Income Tax

10% - 30% dependent on income band.

Levied on income from business, employment, rent, dividends, interest and royalties of Kenyan residents.

Pay As You Earn is the method of collection.


Withholding tax is charged on royalties as follows:

  • Residents: - 5%
  • Non-Residents: 20%
Stamp Duty

A rate of 0% - 2% applies to the transfers of property, mortgages and debentures and marketable securities.

Technical Service Fees

Withholding tax is charged on technical service fees as follows:

  • Residents - 5%
  • Non-Residents - 20% unless an applicable tax treaty provides otherwise.
Thin Cap Regulations

Thin Cap rules are provided for under the provisions of Sections 4A 1(a) and 16 (2)(j) of the Income Tax Act, Cap 470. In order for the Thin Cap rules to apply to a particular company, the following requirements have to be met:

  • the financial assistance is being granted to a resident company by a related non-resident company, which, together with no more than four other persons, control the resident company; and
  • the maximum debt to equity ratio for which the Thin Cap rules apply is 3:1.

It should be noted that thin capping does not apply to banks and insurances companies.

The Income Tax Act, Cap 470 can be downloaded here.

Transfer Pricing

The Income Tax Act requires transactions between resident companies and their related non-residents to be at arm's length.

Turnover Tax

This is an indirect tax that is applicable to small business taxpayers whose total annual amount of revenue/sales (turnover) is between 1.5 million and 5 million Kenyan Shillings Therefore, small business taxpayers who do not qualify for VAT pay the turnover tax.

The Turnover tax is aimed at bringing businesses in the informal sector into the tax bracket. These include small scale manufacturing firms and Jua Kali businesses, agricultural enterprises and transport industries. The turnover tax rate is 3 per cent. Businesses that make losses are exempt from turnover tax. It should be noted that such businesses do not qualify for any deductions before the calculation of the turnover tax.

Value Added Tax

The standard rate is 16% in the supply and import of taxable goods and services, other than electrical energy and fuel oils.

However, VAT is chargeable at a zero rate on the export of goods and taxable services. A list of all zero rated goods and taxable services are set out under the Second Schedule of the Value Added Tax Act No. 35 of 2013.

The Act can be downloaded here.