A GUIDE TO DOING BUSINESS IN KENYA THE POWER OF BEING UNDERSTOOD AUDIT l TAX l CONSULTING
CONTENTS ABOUT RSM... 6 GENERAL... 8 INTRODUCTION... 8 POPULATION AND LANGUAGE... 8 FOREIGN RELATIONS... 9 BUSINESS INFRASTRUCTURE... 9 Power and Energy... 9 Telecommunication... 9 Road Transport... 10 Air Transport... 10 VISION 2030 AND THE ECONOMY... 11 Agriculture... 11 Manufacturing... 12 Tourism... 12 Financial... 12 Building and Construction... 12 EAST AFRICAN COMMUNITY... 13 RELATIONSHIP OF GOVERNMENT AND BUSINESS... 13 COMPETITION LAW... 14 East African Community (EAC) Competition Act... 15 BUSINESS ENTITIES... 16 TYPES OF BUSINESS ENTITIES AND THEIR FORMATION PROCEDURES... 16 Registered Companies (Private and Public)... 16 Branch Office of a Foreign Company... 17 Partnership... 17 Sole Proprietorship... 18 Societies... 18 Personal Identification Number and VAT Registration... 19 Accounting Period Ends... 19 Investment Approval Process... 20 CAPITAL CONTRIBUTION... 20 Capital... 20 Regulation of Foreign Investment... 20 Thin Capitalisation... 20 AUDIT REQUIREMENTS... 21 COMPANY SECRETARY... 21 ANNUAL STATUTORY FILING... 22 OTHER RETURNS... 22 ACCOUNTING... 22 Statutory Framework Governing Financial Reporting in Kenya... 22 Financial Reporting and Auditing Standards... 23 TAXATION... 24 CORPORATE TAX... 24 Basis of Taxation and Tax Rates... 24 Specified Sources of Income... 26 2 I P a g e DOING BUSINESS IN KENYA
Export Processing Zone Enterprises... 26 Special Economic Zone Enterprises... 27 Deductibility of Expenses... 27 Capital Allowances... 29 Business with Resident and Non-Resident Persons, Transfer Pricing and Anti-Tax Avoidance Provisions... 31 Tax Returns and Dividend Tax Account... 32 Advance, Instalment and Final Tax Payments and Deadlines... 33 Turnover Tax... 33 PERSONAL INCOME TAX... 34 Introduction... 34 Basis of Taxation and Tax Rates... 34 Personal and Other Reliefs... 35 Taxation of Benefits... 35 Tax Returns and Payment Deadlines... 38 Advance, Instalment and Final Tax Payments and Deadlines... 39 WITHHOLDING TAX... 39 TAX PROCEDURES ACT... 41 TAX PENALTIES... 41 TAX OBJECTION AND APPEALS... 43 DOUBLE TAXATION TREATIES... 44 VALUE ADDED TAX... 45 Basic Concepts and Rates... 45 Application for Registration... 46 Pre-registration Input VAT... 46 De-registration... 47 Continuing Obligations of a Taxpayer... 47 Output Tax in Relation to Supply of Goods and Services... 48 Records, Invoices, Credit and Debit Notes... 51 Bad Debts... 54 Input Tax... 54 Collection and Refund of Tax... 55 Withholding VAT Agents... 56 VAT Penalties... 57 Value Added Tax Regulations, 2017... 58 CUSTOMS DUTY... 58 Legal and Administrative Framework... 58 Import Duties and Levies... 59 Determination of Customs Value (Valuation)... 60 Export Levy... 60 EXCISE DUTY... 61 Duty and Application... 61 Key Compliance Issues... 61 EMPLOYMENT... 62 FOREIGN VISA... 62 Visa Requirements... 62 FOREIGN PERSONNEL... 64 Permits and Passes... 64 DOING BUSINESS IN KENYA 3 I P a g e
Dual Citizenship... 65 Permanent Residence... 65 LABOUR LAW... 66 Employment Contracts... 66 Wages... 67 Working Hours... 67 Overtime... 67 Leave... 67 Public Holidays... 68 STATUTORY DEDUCTIONS... 69 TRADE UNION... 71 INTELLECTUAL PROPERTY RIGHTS... 72 PATENT... 72 UTILITY MODEL... 73 INDUSTRIAL DESIGN... 73 TRADE MARKS... 74 COPYRIGHTS... 75 LISTING RULES... 76 THE CAPITAL MARKETS AUTHORITY... 76 Types of Listing Markets... 76 Main Investments Market Segment... 76 Alternative Investments Market Segment... 77 Growth Enterprise Market Segment... 78 Fixed Income Securities Market Segment... 79 LISTING BY INTRODUCTION... 81 PAYABLE FEES... 82 LISTING INCENTIVES... 83 INVESTING IN KENYA... 84 GENERAL INFORMATION ABOUT INVESTING IN KENYA... 84 Gateway to East Africa... 84 Access to Large Pool of Skilled Workers... 84 Kenya: Living the Good Life... 84 Fully Liberalised Economy... 84 Money Transfers Outside Kenya... 85 Well Established Local and Foreign Private Sector... 85 TAX-RELATED INCENTIVES FOR INVESTING IN KENYA... 85 Tax Treaties and Investment Promotion... 85 Bilateral Trade Agreements... 85 Investment Allowances... 85 Capital Gains... 85 Received Dividends... 85 FOREIGN OWNERSHIP OF SHARES AND LAND... 86 Shares in Companies Incorporated in Kenya... 86 Restrictions on Land Ownership... 86 Investment Regulation... 86 THE INVESTMENT PROMOTION ACT... 86 APPENDIX OF ACRONYMS USED IN THE BOOKLET CONTACTS 4 I P a g e DOING BUSINESS IN KENYA
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CONTACTS Kenya Nairobi 1st Floor, Pacis Centre, Slip Road off Waiyaki Way, Westlands P.O. Box 349-00606, Nairobi, Kenya T +254 20 3614000 / 4451747/8/9 M +254 706 347950 / 772 786111 F+254 20 4451773 E info@ke.rsm-ea.com Contact: Ashif Kassam (Executive Chairman) www.rsm.global/kenya Tanzania Dar es Salaam 16th Floor, Golden Jubilee Towers, Ohio Street P.O. Box 79586 Dar es Salaam, Tanzania T +255 22 2137314 / 15 F + 255 22 2137316 E info@tz.rsm-ea.com Contact: Lina Ratansi (Group Chief Executive) www.rsm.global/tanzania Mombasa 3rd Floor, Bayview Place, Moi Avenue P.O. Box 87227-80100 Mombasa, Kenya T +254 41 2311778 / 2312640 / 2224116 F +254 41 2222397 E infomsa@ke.rsm-ea.com Contact: Nihla Mazrui www.rsm.global/kenya Uganda Kampala 6th Floor, DTB Centre, Plot 17 / 19, Kampala Road P.O. Box 31704 Kampala, Uganda T +256 414 342780 / 9 Email: info@ug.rsm-ea.com Contact: John Walabyeki (Managing Partner) www.rsm.global/uganda THE POWER OF BEING UNDERSTOOD AUDIT TAX CONSULTING