The principal forms of business enterprises in Kenya are:

  • Limited Company – private or public
  • Branch of a foreign company
  • Partnership
  • Sole Proprietorship
  • Joint Venture
  • Co-operative Society

Limited Companies

The provisions concerning limited companies are contained in the Kenyan Companies Act of 1962 which is modelled closely on the UK Companies Act 1948 (with amendments).

Limited companies may be public or private. A private company is prohibited from inviting the general public to subscribe for its shares, it cannot have more than 50 members, and its shares are not freely transferable between members. A public company as its name suggests, may offer its shares to the general public. There is no maximum number of members and its shares are freely transferable. Such a company is the equivalent of a corporation in many other countries.


The law relating to partnerships is largely contained in the Partnership Act 1962. A partnership is restricted to a maximum of 20 persons, each of whom is jointly and separately liable for all debts incurred. If these numbers are exceeded the partnership must be registered under the Companies Act. A partnership may be formed by any kind of agreement. This need not be formal but is usually in writing. If the partnership does not trade under the names of the partners, these names must be registered under the Registration of the Business Names Act 1962. Partnership agreements do not have to be filed in any public registry nor do partnership financial statements have to be published. Partnerships are not required by law to appoint auditors although many larger partnerships do so in practice.

The death, resignation or retirement of any individual partner dissolves a partnership unless, as is usual, the partnership agreement provides otherwise.

A limited partnership may be formed. The same maximum number of partners applies but at least one partner must be a general partner who is liable for all the debts of the firm without a limit. A limited partner cannot take part in the management. Limited partnerships are governed by the Limited Partnership Act 1962 and under the Act, are subject to registration with the Registrar of Companies.

Branches of Foreign Companies

A company incorporated outside Kenya may carry on business in Kenya through a branch. In order to establish a branch the following documents and details must be submitted to the Registrar of Companies:

  • a certified copy of the company’s own Memorandum and Articles of Association or equivalent constitution documents
  • a list containing the names, addresses, nationalities and occupation of its directors and company secretary
  • a statement of existing mortgages and charges created by the company in Kenya, if any
  • the names and addresses of one or more Kenyan residents who are authorised to accept legal notices on the company’s behalf
  • the address of the company’s registered or principal office

Financial statements of a branch must be delivered to the Registrar of Companies. Under the Companies Act, there is no requirement for those financial statements to be audited but, in practice, an audit is usually performed since the tax authorities are reluctant to accept unaudited branch accounts for tax purposes.

Joint Ventures

Joint ventures with Government-owned agencies are encouraged. These may be conducted as a partnership or sometimes as limited companies in which all the parties are shareholders.


The income tax law is contained in the Income Tax Act 1973, under which companies and individuals are taxed. It is administered by the Commissioner of Income Tax who has offices in Nairobi, Mombasa, Thika, Nakuru, Kisumu, Nyeri and Eldoret. Taxation changes and amendments to the Act are normally announced by the Minister of Finance in his budget speech delivered in June each year.

Tax returns are made in Kenya pounds although for consistency businesses use the official currency of Kenya shillings. One Kenya pound is equivalent to twenty Kenya shillings.

In general, the tax department is unwilling to give advance rulings on proposed transactions. A foreign investor introducing a major project is of particular importance to the Kenyan economy and may be liable for specific tax concessions, but these would be negotiated with the Minister of Finance, and not with the Income Tax Department.

Corporate Taxes

Kenyan income tax is payable at the corporate rate by companies and also by unincorporated organisations and associations (excluding partnerships) that have taxable income as defined by the Income Tax Act. Exemptions are granted in case of religious, charitable and educational trusts, pension trusts and some other bodies.

Taxes on Individuals

Individuals, like companies, are liable to Kenyan income tax only on income arising in Kenya. However, in the case of income from employment received by a resident individual, the whole of that income is deemed to arise in Kenya, whether the duties of employment are performed in Kenya or abroad and wherever the income is paid. In effect therefore a resident individual is liable for Kenyan income tax on his worldwide employment income.

A resident is liable for Kenyan income tax at the normal graduated rates on income from employment with a resident employer or a Kenyan permanent establishment of a non-resident employer. A non-resident is liable to the various flat rate withholding taxes.

Other Taxes

  • Value Added Tax
  • Customs and Excise Duty
  • Stamp Duty
  • Estate Duty
  • Real Estate Tax
  • Motor Vehicles Tax
  • Air Passenger Service Charge
  • Local Government Service Charge



Foreign investors may be issued with a Certificate of Approved Enterprise provided that the proposed investment is likely to benefit the Kenyan economy in various ways. Foreign investors holding this certificate are protected under the Act from compulsory acquisition of their enterprises and are entitled to the repatriation of both capital and profits.

Tax Incentives

A deduction is allowed in computing taxable income which is designed to encourage industrial growth and attract foreign investments.

It is allowed in respect of capital expenditure on new manufacturing industries and hotels. It is given in the year of income in which the buildings and machinery are first used. The allowance is granted at a rate of 60% and 100% for firms manufacturing under bond.

The following rates apply for investment deduction on qualifying expenditure:

Other areas 60%
Firms manufacturing under bond 100%

Manufacture under bond means the production of goods for export under a licence. The investment deduction is, however, deductible from the total cost of the asset, the balance forming the basis for wear and tear allowance or industrial buildings allowance.

A similar deduction, but at 40%, is available on the purchase by a resident shipowner of any new ship larger than 495 tons. However, if a ship that has attracted an investment allowance is sold within five years from the end of the year in which the deduction was given, the deduction is withdrawn and treated as taxable income in the year of sale.


There are no foreign exchange controls.


Any foreigner who intends to work in Kenya requires an appropriate entry permit before he can commence work. This is issued by the Kenyanisation of Personnel Bureau of the Immigration Department, which is part of the Office of the President.

Dependant Passes

Each member of a work permit-holders family requires a “dependant pass” which is stamped in the passport. Any dependant seeking work must obtain a separate work permit in his or her own right.

Registration of Aliens

Any foreigner planning to stay in Kenya for longer than three months should register under the Alien Registration Act. Upon registration the individual receives a form of identity card stating name, address and other particulars


Nationals of certain countries require visas to enter Kenya.

Resident Permits

Foreign nationals who intend to retire in Kenya would normally be granted a class K entry permit provided that they can satisfy the authorities that they are in receipt of adequate income. Such a permit, which is issued by the Immigration Department, does not entitle the holder to accept employment or to trade.

Shaun Bakamoso

Greetings. I'm Shaun Bakamoso, and I'm thrilled to be your guide through the dynamic world of business news in South Africa here at With a passion for staying informed and a keen interest in the ever-evolving landscape of business, I've dedicated myself to providing you with timely, insightful, and comprehensive coverage of the latest developments impacting the South African economy. / Instagram