The Kenyan legal system is generally the Common law System. Kenya has a supreme Constitution which is supported by other laws in what appears to be a hierarchy consists of; statutory (written) law, international laws ratified by Kenya, customary international law,certain Acts of Parliament of the United Kingdom, the English common law, doctrines of equity, African customary law and Islamic law.

Country overviewKenya flag


Estimated to be 53.01 million people as per the 2019 Census


William Samoei Ruto (since 13 September 2022)

Capital City

Nairobi - estimated to be 4.397 million people

Major cities

Mombasa (1.2 million people), Nakuru (570,674 people) and Kisumu (397,357 people)

Major industries

Agriculture, Forestry, and Fishing; Construction; Human Health and Social Worker’s activities; Finance and Insurance; Accommodation and Food Services (Hospitality); Education; Transport and Storage; Wholesale and Retail Trade; Manufacturing; Information Communication and Technology (As provided/ categorised by the Kenya National Bureau of Statistics (KNBS))


Kenya 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

Setting Up Business in Kenya

(i) Business Forms

The legal business vehicles in Kenya include:

(a)    Private/public limited companies by shares: This vehicle is registered under the Companies Act, 2015, Laws of Kenya. This is the most common form of registration for business entities in Kenya. There are also no restrictions on the type of purpose or activity a private company limited by shares can undertake except in certain industrial sectors (as discussed below). Private companies are regulated by the Registrar of Companies and are governed by the provisions of their Articles of Association. They are managed by a Board of Directors appointed by the shareholders. A private company should have a minimum of 1 and a maximum of 50 shareholders. It must have a minimum of one director, who must be a natural person. There is no restriction as to the nationality of the directors or shareholders.
(b)    Branch of a foreign company: This vehicle is registered under the Companies Acct, 2015, Laws of Kenya. The Certificate of Compliance entitles the foreign company to conduct business in Kenya as a branch of a foreign company and it is viewed for all purposes (including corporation tax) as a foreign company.
(c)    Limited liability partnership (LLP): LLPs are registered and governed by the provisions of the Limited Liability Partnership Act, 2011 (the “LLP Act”).  An LLP must have at least two partners. There are no restrictions on who may become a partner and foreigners may be partners.  The LLP must also have at least one manager to take part in the overall management of the partnership who should be a natural person who is 18 years old (at least) and a resident in Kenya. The manager is personally responsible for ensuring that the LLP complies with routine filing requirements as to solvency and changes in particulars.  Although LLPs offer greater protection against personal liability than sole proprietorships/general partnerships, they are seldom used in Kenya, perhaps because of their grey nature. 

(ii) Statutory Registrations

Whether registered as a locally incorporated entity, a branch of a foreign company, LLP or a partnership, upon incorporation/registration, the ensuing entity ought to be registered for the following statutory deductions/payments :-

All Taxes payable by the entity

  • registration with the Kenya Revenue Authority (KRA) for corporation tax and obtain a tax Personal Identification Number (“PIN”);
  • registration for VAT where the annual turnover is expected to be in excess of Kenya Shillings Five Million (Ksh. 5,000,000/-) (approx. US$ 35,000/- under the current exchange rate) per annum;
  • registration to submit Pay as you earn (PAYE) with regard to your employees (income tax on employment income);
  • registration with the National Social Security Fund (NSSF), National Hospital Insurance Fund (NHIF) and National Industrial Training Authority (NITA) as soon as it has employees in Kenya. The registration fees and contributions are nominal;
  • work permits for all foreign staff and their dependants’ passes for their family members accompanying them to Kenya. Please find attached a schedule of the requirements and applicable fees;
Office space
  • Single Business Permit issued by the host county government;
  • Fire Compliance Certificate also issued by the host county government;
  • Certificate of Occupation of a Workplace from the Department of Occupational Health and Safety.
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.

Nairobi Securities Exchange (NSE)

The NSE was founded in 1954, and therefore has over a six-decade heritage in listing equity and debt securities. It’s organised as a public limited company with a Board and management team. NSE demutualized and self-listed in 2014.

The NSE offers some of the best trading facilities in the African context for local and international investors looking to gain exposure to Kenya and Africa’s economic growth.

The NSE is regulated by the Capital Markets Authority of Kenya and is charged with the responsibility of developing the securities market and regulating trading activities. It is a full member of the World Federation of Exchange, a founder member of the African Securities Exchanges Association (ASEA) and the East African Securities Exchanges Association (EASEA). The NSE is a member of the Association of Futures Market and is a partner exchange in the United Nations-led SSE initiative.

The most recent key developments of the NSE are:

  • In 2019, NSE launched NEXT derivatives markets, which made it the second African exchange to launch a derivative market after Johannesburg Stock Exchange (JSE). The derivative market was to enhance investors’ portfolio performance through availing risk management tools
  • In November 2021, the NSE published the Environmental, Social and Governance (ESG)  manual for Kenya listed companies meant to provide detailed guidelines on implementation of ESG metrics in organizational strategy, as well as collection, analysis and reporting of ESG performance. The move was to raise standards on ESG practices by companies thereby enhancing competitiveness of Kenya capital markets in the global market space
  • The launch of day trading. The NSE launched day trading in December 2021 as part of its strategy to enhance market liquidity following the approval by the Capital Markets Authority (CMA) of Kenya. Day trading refers to the practice of purchasing or selling a security within a single day or trading session or multiple times over the course of the day. The move made Kenya the first frontier market to implement day trading.
    ●    NSE announced in 2022 the introduction of fractional investing which allows investors to purchase less than a whole share of a security. The move was to help to increase market activity by opening up access to stocks that would be out of reach due to high prices.

The Central Depository & Settlement Corporation Limited (CDSC)

CDSC is a Limited Liability Company licenced by the Capital Markets Authority to provide automated clearing, delivery and settlement facilities in respect of transactions carried out at Nairobi Securities Exchange.

The central depository system provides a centralized system for the transfer and registration of securities in electronic format without the necessity of physical certificates.

The Capital Market Authority Regulatory Sandbox

The Regulatory sandbox is a tailored regulatory environment for conducting limited scale, live tests of innovative products, solutions and services prior to launching into the open market. The Regulatory Sandbox provides an evidence-based tool for fostering innovation while allowing the Authority to remain vigilant to investor protection, financial stability and integrity risks.

Equally important, the Regulatory Sandbox is intended to help accelerate the Authority’s understanding of emerging technologies and support evidence-based approaches to regulation that advance the goals of investor empowerment and protection, capital markets deepening and broadening.
Regulatory Sandbox tests incorporate appropriate safeguards to identify and manage potential risks and mitigate the consequences of failure, such as undisclosed risk of financial loss or other undisclosed risks to customers, investors, market participants, and the Kenya capital markets.

Participants shall comply with certain minimum regulatory requirements prescribed by law and applicable to all capital market participants as further specified by the Authority in a safeguard and supervision plan which forms a part of the test plan.

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 regulations

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

The merger thresholds prescribed by the Competition Rules are as outlined below:

a.    Mergers not requiring approval from the Competition Authority

Mergers where the combined turnover or assets of the merging parties (whichever is higher) does not exceed KES 500 million.

Mergers which meet the COMESA Competition Commission Merger Notification threshold and at least two-thirds of the turnover or assets (whichever is higher) is not generated or located in Kenya.

b.    Mergers subject to an exclusion application
Mergers where the combined turnover or asset value of the merging parties (whichever is higher) is between KES 500 million and KES one billion.

Transactions where the combined turnover or asset value of the merging parties (whichever is the higher) is above KES one billion but the turnover or asset value (whichever is the higher) of the target is less than KES 500 million.

Transactions involving firms engaged in prospecting in the carbon based mineral sector irrespective of asset value.

c.    Mergers that require approval
Mergers where the minimum combined turnover or asset value of the merging parties (whichever is higher) is KES one billion shillings and the turnover or asset value of the Target (whichever is higher) exceeds KES 500 million.

Where the turnover or assets (whichever is the higher) of the acquiring undertaking is above KES 10 billion and the merging parties are in the same market or can be vertically integrated unless the transaction is notifiable to the COMESA Competition Commission.

In the carbon based mineral sector, if the value of the reserves, the rights and associated assets to be held as a result of the merger exceeds KES 10 billion.

Where the undertakings operate in COMESA, meet the COMESA Merger Notification thresholds but 2/3rds or more of their turnover or assets (whichever is higher) is generated or located in Kenya.

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.
Customs duties and free trade agreements

Kenya is engaged in a number of bilateral and multilateral free trade agreements at the regional and global level such as the East Africa Community, the Common Market for Eastern and Southern Africa (COMESA), Economic Partnership Agreement with the EU and with United Kingdom, The African Economic Community, The Great Lakes Region, ACP/Cotonou Partnership Agreement and the African Growth and Opportunity Act (AGOA).

Corruption / transparency
Corruption Perception Index rank worldwide for 2022 by Transparency International


Corruption Perception Index score for 2022 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?


Alternative dispute resolution mechanisms

The Constitution of Kenya encourages the promotion of alternative forms of dispute resolution. Alternative forms of dispute resolution include arbitration, mediation and reconciliation. Arbitration is generally appreciated as a faster and more efficient method of dispute resolution than litigation. It is becoming increasingly popular as a method of dispute resolution in Kenya-law governed contracts.


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 has a Kenyan branch for promoting the facilitation and determination of disputes by arbitration or other forms of Alternative Dispute Resolution.

The Kenyan branch of the Chartered Institute of Arbitrators (CIArb) unveiled its revised Arbitration Rules, 2020 (the Rules). The Rules came into force on 1 October 2020 and will apply to all cases registered after this date. The Rules provide a more comprehensive set of procedural rules as compared to the 2012 Arbitration Rules which it repeals. The changes introduced in the Rules focus on increasing the efficiency and flexibility of arbitrations administered by CIArb.

Kenya is a signatory to other international arbitration-affiliated treaties such as the International Centre for Settlement of Investment Disputes (ICSID) Convention and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention). Both conventions form part of Kenyan law by virtue of the application of Article 2(6) of the Constitution.

Whereas parties are free to choose their preferred forum for arbitration, the Nairobi Centre for International Arbitration (NCIA) is a dispute resolution service provider established by statute suited for domestic and international commercial arbitration.

The primary mandate of the NCIA is to administer international commercial arbitration and other forms of dispute resolution processes including mediation. The NCIA has published the NCIA Arbitration and Mediation Rules, which facilitate institute-administered arbitration and mediation under its auspices.

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 for enforcement to the Kenyan courts is mandatory.

Court-annexed mediation

There is traction of mediation which is attributable to court-annexed mediation programme established by the Judiciary.

The programme, which has been rolled out across several divisions of the High Court, allows the Court to screen cases to establish whether they qualify for mediation. If so, the qualifying case is referred for resolution by a mediator appointed by the Court.

The mediator is required to guide the parties to settlement within a capped 60-day prescribed period. The period may be extended by the Court for a further ten (10) days.

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.

Online court proceedings

The COVID-19 pandemic saw the judiciary integrate technology in judicial proceedings by introducing electronic filing, electronic delivery of judgments and hearings via video conference.

The courts have increasingly phased out physical court appearances and moved all court proceedings to virtual platforms. The most common platform used by the Judiciary for court is MS Teams. Adoption of virtual courts in Kenya is so widespread now that, virtually all courts accept virtual appearance. Few cases such as criminal cases still require physical attendance in court.

Enforcement of foreign judgments

Foreign judgments are enforceable in Kenya under the Foreign Judgments (Reciprocal Enforcement) Act (Chapter 43) laws of Kenya.
Foreign judgments are enforceable under the principle of reciprocity.
To be enforceable, the foreign judgment must originate from a country with which Kenya has a reciprocal recognition agreement. Presently these countries are:

  • 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.
The recognition of foreign judgments is not automatic and is only accepted on a case-by-case basis upon consideration by the High Court.

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

Foreign investment is actively encouraged in all sectors of the economy. Notably, the government offers investment incentives that are available through the Kenya Investment Authority, special processing and export-led schemes.

There are no laws that prohibit a foreign company from setting up in Kenya save for certain sectors where local shareholding is required. These sectors include telecommunications, banking, insurance and mining.


The Investment Promotion Act established the Kenya Investment Authority (KenInvest) whose main objective is to promote investments in Kenya.

KenInvest is responsible for facilitating the implementation of new investment projects, providing after-care services for new and existing investments, as well as organising investment promotion activities both locally and internationally.

An investor may apply for an investment certificate from KenInvest. This certificate will entitle its holder to receive assistance from KenInvest in the expedient processing of licences necessary for the business and to conduct its investment activities in Kenya.

Export Processing Zone

Export processing zones (EPZs) are designated parts of Kenya that are aimed at promoting and facilitating export-oriented investments and to develop an enabling environment for such investments. The creation and regulation of EPZs 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.

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.

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.

Another form of incentives is through double tax agreements (DTAs) whose benefits include lower withholding tax rate for certain payments such as interest, management fees, royalties etc. However, this is limited to countries who have ratified and adopted the DTAs with Kenya as discussed below (Taxation). 

Foreign Investor Rules

Save for certain industrial sectors, 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 industries 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 at 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 freehold land which is majorly 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.

It is necessary for entities operating in certain sectors to be licensed by the relevant regulator, for example:

  • Banks require licences from the Central Bank of Kenya;
  • Insurance companies require licences from the Insurance Regulatory Authority;
  • Mining companies require licences from the Mineral Rights Board;
  • Telecommunications companies require licences from the Communications Authority of Kenya;
  • Market intermediaries such as brokers,fund managers and investment banks require licences from the Capital Markets Authority.

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 ownership 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.
  • Kenya has a source-based tax system, in terms of which both residents and non-residents are subject to tax on income earned from a source in Kenya.
  • What entails corporate resident?
    A company is tax resident in Kenya if:
  • it is incorporated under Kenyan law;
  • the management and control of the affairs of the company are exercised in Kenya in a particular year of assessment; or
  • It has been declared by the Cabinet Secretary of the National Secretary by a notice published in the Kenya Gazette, to be a tax resident for any year of income.
Corporate tax rate
  • This is payable on the taxable profits earned by a company in a year. Resident companies are subject to corporate income tax at the rate of 30%, whereas branches/permanent establishments of foreign companies are taxed at the rate of 37.5%. The tax is paid through on an instalment tax basis over the course of the tax/financial year. The instalment tax payable is based on the lower of tax that was paid in the preceding year assessment multiplied by 110% and on a current year basis, which is an estimate of the taxes that will be payable for that year. The tax is paid in 4 equal instalments that are due on the 4th, 6th, 9th and 12th month of the company’s financial year.
  • Newly listed companies, companies operating in export processing zones and special economic zones, companies engaged in business under a special operating framework arrangement with the government, companies operating a plastic recycling plant, companies constructing at least 400 residential units annually and companies engaged in the local assembly of motor vehicles qualify for reduced tax rates during specified periods.
Personal income tax

Pay As You Earn (PAYE)

  • The income tax rates applicable to resident individuals are:
    chargeable income (KES) tax rate:

Monthly Pay Bands (Ksh.)                Annual Pay Bands (Ksh.)                 Rate of Tax (%)

On the first Shs. 24,000                     On the first Shs. 288,000                 10

On the next Shs. 8,333                     On the next Shs.100,000                  25

On the next Shs. 467,667                 On the next Shs. 5,612,000              30

On the next Shs.300,000                  On the next Shs. 3,600,00                32.5

Capital Gains tax (“CGT”)
  • Net capital gains accruing on the transfer of property situated in Kenya are generally subject to CGT at the rate of 15%.
  • The definition of property includes land, buildings and marketable securities.

Taxed at 5% for residents.

Under the Income Tax Act, a resident, when referring to an individual, 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 15% 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.


Withholding tax is chargeable on interest earned as follows:

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

Withholding tax is charged on royalties as follows:

  • Residents: - 5%
  • Non-Residents: 20%
Management or Professional Fees
  • Residents - 5% (if the aggregate value is at least KES24 000 in a month)
  • Non-residents - 20%

*The withholding tax rate for non-residents may be reduced in terms of a relevant double tax agreement.

Double Taxation Treaties

Kenya has double taxation treaties with:

  • Canada, Denmark, France, Germany, India, Iran, Norway, Qatar, Republic of Korea, Seychelles, South Africa, Sweden, the United Arab Emirates, the United Kingdom and Zambia

Stamp duty is levied under the Stamp Duty Act, Chapter 480 laws of Kenya on a number of instruments, including conveyances or transfers on the sale of any property, sale of any stock or marketable security, sale of any immovable property, mortgages, bonds, debenture or covenants, and instruments of partnership.

Stamp duty at the rate of 1% is payable on the transfer of shares on the value of the sale. Shares listed on the Nairobi Stock Exchange are exempt from stamp duty.

Stamp duty on the transfer of immovable property is levied at the rate of 4% for property within municipalities and 2% for property outside municipalities.


Taxable Supplies

  • VAT is levied on the supply of goods and services in Kenya and on the importation of taxable goods and services.
VAT Rate

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.

Registration Threshold
  • Any person who, in the course of his/her business, has supplied taxable goods or services to a value of at least KES 5 - million in a 12-month period must register for VAT purposes.
VAT Withholding
  • Taxable supplies made by persons designated by the KRA are subject to withholding VAT at the rate of 2% of the taxable value.
Reverse VAT on Imported Services
  • Resident companies are required to account for output VAT in respect of taxable imported services rendered by non-resident companies where the registered person would not be entitled to a tax credit for the full amount of input tax in terms of a reverse-charge mechanism.
  • Non-residents without a permanent establishment in Kenya rendering services through a digital market to persons in Kenya are required to register for VAT (or appoint a tax representative to account for VAT on their behalf). This requirement exists even if the value of their supplies does not meet the KES 5-million threshold.

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 percent. 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.


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.


In terms of Kenya’s transfer pricing rules, transactions between related enterprises must be entered into on an arm’s length basis.

  • Enterprises are related if one of the enterprises participates directly or indirectly in the management, “control” or capital of the other enterprise, or a third person participates directly or indirectly in the management, “control” or capital of both enterprises.
  • “Control” is extensively defined to include inter alia a situation where a person directly or indirectly holds at least 20% of the voting rights in a company or a person has the authority to appoint more than half the board of directors or at least one executive director.

The Income Tax Act was amended by the Finance Act, 2021 which replaced the thin capitalization regime with an interest restriction regime.

Under the interest restriction regime, gross interest paid or payable to a lender which exceeds thirty per cent (30%) of the earnings (excluding exempt income) before interest, tax, depreciation, and amortization (EBITDA) is not an allowable deduction for corporation tax purposes.

“Interest” for the purposes of this limitation includes payments that are economically equivalent or similar to interest and expenses incurred in raising finance.

The interest restriction regime does not apply to:

(a) Bank or financial institutions licenced under the banking act (including Microfinance institutions licenced and non-deposit taking microfinance business under the Microfinance Act 2006;

(b) Entities under the Hire Purchase Act;

(c) Non-deposit taking institutions involved in the lending and leasing business;

(d) Companies involved in the manufacture of human vaccines;

(e) companies engaged in manufacturing whose cumulative investment in the preceding five years from the commencement of this provision is at least five billion shillings;

(f) companies engaged in manufacturing whose cumulative investment is at least five billion shillings, provided that the investment shall have been made outside Nairobi City County and Mombasa County;

(g) holding companies that are regulated under the Capital Markets Act.


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%.

There are currently no exchange control restrictions applicable in Kenya. The Exchange Control Act, which imposed exchange controls, was repealed in 1995.  However, foreign payments need to be made through commercial banks.Foreign investors are therefore free to repatriate funds out of the country. However, the Central Bank of Kenya (“CBK”) has established foreign exchange guidelines meant to ensure that cross-border payments are not connected with illegal financial transactions such as money laundering or the financing of terrorism.

Every reporting institution has an obligation to report any transactions on all cash transactions equivalent to or exceeding US$ 10,000/- or its equivalent in any other currency to the Financial Reporting Center established by the CBK, whether the transaction appears to be suspicious or not. Further, banks and financial institutions are required by the CBK to retain documents of the underlying transaction pursuant to which foreign exchange payments abroad are made. In our opinion, this directive is meant for security purposes rather than a restriction to the repatriation of funds.