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Summary Table of Kenya Company Registration

Summary   

LLC

Fast Solution LLC

Free Zone LLC

Public Limited Company

LLP

Branch Office

Also known as

LLC

Fast Solution LLC

EPZ Company

PLC

LLP

Branch Office

Best use of a company? 

All products and services

Close a customer deal now

Manufacturing and export trading

To secure public funding

Professional services

Short-term projects

How soon can you invoice a client/sign sales contract?

7 weeks

4 weeks

10 weeks

9 weeks

9 weeks

7 weeks

How soon can you hire staff?

7 weeks

4 weeks

10 weeks

9 weeks

9 weeks

7 weeks

How soon can you sign a lease agreement?

4 weeks

4 weeks

10 weeks

6 weeks

6 weeks

4 weeks

How long to supply corporate bank account numbers?

3 months

6 weeks

3 months

4 months

4 months

3 months

How long to supply company registration/tax number?

7 weeks

4 weeks

10 weeks

9 weeks

9 weeks

7 weeks

Corporate tax rate on annual net profit?

30%

30%

0%

30%

30%

37.5%

Additional turnover tax rate? (turnover under US$48k)

3%

3%

0%

3%

3%

3%

Limited liability entity?

Yes

Yes

Yes

Yes

Yes

No

Government grants available?

Yes

Yes

Yes

Yes

Yes

Yes

Government approval required for foreign owners?

Yes

Yes

Yes

Yes

Yes

Yes

Kenyan director/local representative required?

Yes

Yes

No

Yes

Yes

Yes

Minimum paid up share capital?

US$2

US$2

US$2

US$97,000

US$2

None

Can bid for government contracts?

Yes

Yes

Yes

Yes

Yes

Yes

Corporate bank account location?

Absa Bank Kenya PLC

KCB

Standard Charted Bank

National Bank of Kenya

ABC Bank

Ecobank

Can secure trade finance?

Yes

Yes

Yes

Yes

Yes

Yes

VAT payable on sale to local customers?

16%

16%

16%

16%

16%

16%

Average total business set up engagement costs?

US$15,850

US$29,710

US$19,300

USD$ 18,950

US$15,850

US$16,250

Average total engagement period?

4 months.

4 months

5 months

5 months

5 months

4 months

Company Registration

LLC

Fast Solution LLC

Free Zone LLC

Public Limited Company

LLP

Branch Office

Kenyan director required?

Yes

Yes

No

Yes

Yes

Yes

Minimum number of shareholders/partners?

1

1

1

7

2

Parent company

Maximum shareholding for foreigners?

100%

100%

100%

100%

100%

100%

Minimum paid up statutory share capital?

US$2

US$2

US$2

US$97,000

US$2

None

Security deposit to be kept with government?

No

No

No

No

No

No

Shelf company available?

Yes

Yes

Yes

Yes

Yes

No

Time to incorporate a new entity?

7 weeks

4 weeks

10 weeks

9 weeks

9 weeks

7 weeks

Can easily convert to a PLC?

Yes

Yes

Yes

N/A

No

No

Public register of shareholders and directors?

Yes

Yes

Yes

Yes

Yes

Yes

Can have preference shareholders?

Yes

Yes

Yes

Yes

Yes

No

Business Consideration

LLC

Fast Solution LLC

Free Zone LLC

Public Limited Company

LLP

Branch Office

Good entity for trademark registration?

Yes

Yes

Yes

Yes

Yes

Yes

Can secure an import and export license?

Yes

Yes

Yes

Yes

Yes

Yes

Sponsorship by a local citizen required?

No

Our clients need to travel to Kenya for business set up?

No

Temporary physical office solutions available?

Yes

You need a local resident as bank signatory?

No

Can be wholly foreign owned?

Yes

The entity will likely be regulated by?

Companies registries

Minimum number of directors/managers?

1

Monthly VAT reporting to the government?

Yes

Must sign an office lease agreement during incorporation?

No

Shareholders $ directors documents to be attested/translated?

No

Each foreign director needs a personal income tax number?

Yes

Foreign director needs a resident visa?

Yes

Maximum number of staff allowed?

No maximum number for any entity

Expatriate to local staff ratio?

None

Can secure residence visa for business owner?

Yes

Other useful information

 

What will be added in my customer sales invoice?

Click link

This country has signed free trade agreements?

Yes

This country is a member of WIPO/TRIPS?

Yes

This country is a member of ICSID?

Yes

Average custom duties suffered?

25%

Government foreign investment approval required?

Yes

Average monthly office rental? (US$ per sq m)

US$12

Minimum statutory monthly salary?

US$130

Average monthly US$ salary for local skilled employees?

US$1,400

US$ deposit interest rate (1-year average)

7.82%

Overseas remittance currency controls?

Yes

Banking considerations

 

Multi-currency bank accounts available?

Yes

Corporate visa debit cards available?

Yes

Quality of e-banking platforms?

Very good

Crowd funding available in this country?

Yes

Kenya business setup summary

The recently launched Huduma Centers, 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 intention of listing the same on Nairobi Stock Exchange;
  • A limited liability partnership: this type of entity is perfect for individual skilled professionals including lawyers and consultants looking to establish partnerships;
  • A branch office: foreign companies looking to do business in Kenya without setting up subsidiary will find this entity the best establishment for their intended venture in Kenya;
  • Representative office: Although not provided for in the companies act, foreign banks looking to set up representative offices in Kenya may also do so by directly applying through the Central Bank of Kenya.

Benefits and problems

  1. Our clients will find registering a limited liability company in Kenya easy because;
  • A Kenyan LLC requires only i) one shareholder ii) one director and iii) no minimum paid up capital to be incorporated;
  • The company can be incorporated and registered for tax and our clients do not need to travel during the engagement;
  • Kenyan banks are efficient and can open a multi-currency corporate account with internet banking within four weeks and without our clients travelling to Kenya;
  • Kenya’s formal language is English and foreign nationals will find it easy to communicate with Government officials as well as bank officers during this period;
  1. We recommend to our clients interested to form a company in Eastern Africa to Kenya because:
  • 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 include a new port at Lamu currently underway and a future planned dry port of Naivasha;
  • Kenya is an emerging economy, expected by the International Monetary Fund to grow at approximately 5.8% per year until the end of decennia. It also has a large population of 42 million;
  • Kenya is active in several regional trade blocks, including the Common market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) providing a free trade area within over 20 member states;
  • Also, Kenya has created a custom 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 iii) Burundi iii) Rwanda and iv) Tanzania.
  1. Our clients forming a manufacturing a manufacturing company in Kenya are advised to establish within an export processing zone because;
  • Kenya has seven Export Processing Zone (EPZ) which offer export-oriented foreign companies: i) exemption from corporate income tax and withholding tax up to ten years and iii) exemptions from VAT and customs import duty and stamp duty indefinitely;
  • Any company registered with an EPZ can operate a single license. The Kenya Export Processing Zones Authority also fast tracks EPZ projects, ensuring approval of the license within 30 days;
  • The Kenyan Government allows EPZ companies to sell their wares within the East African Community after compliance with the legal tax procedures for up to 20% of the company’s annual out;
  • The Kenyan EPZ also offers excellent export infrastructure, with ample amount of serviced land, ready factory buildings and office premises including 24-hour security, street lighting and landscaping.
  1. Kenya is a great and cheaper alternative to South Africa for entrepreneurs looking to enter the African region because;
  • A Kenyan company benefits from cheaper utilities, with basic water and electricity bills costing an average of US$40 a month, compared to US$120 a month in South Africa;
  • Mobile phones and internet plans are also significantly cheaper in Kenya;
  • Entrepreneurs stand to benefit from cheap labour because as of 2028, the average wage bill in Kenya is approximately US$600, compared to the average wage bill in South Africa of US$1,423;
  • A top-class office space in Nairobi CBD would not cost more than US$11.5 per sqm. While is South Africa this would not be less than US$19 per sqm.
  1. Our clients will enjoy the following 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, investor 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 labour standards are of poor quality compared to western countries, it is the second best on the continent after South Africa;
  1. The Kenya Free Trade Zone (KFTZ) is a great location for Kenyan company incorporation since it is the unparalleled logistics and distribution centre of the country, providing investors with a range of benefits;
  • Numerous tax benefits including, i) complete exemption from import tariffs and corporate taxation and ii) 0% taxation on dividends;
  • Excellent strategic location that grants companies to serve the neighbouring of Sub-Saharan Africa and middle East as well;
  • Great infrastructure, such as i) modern port facilities; ii) transit airports, and iii) roads and railways network.

 Problems with Kenya company registration

  1. None 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.
  1. Kenyan laws restrict 100% foreign ownership in the following industries i) aviation, where 51% Kenyan shareholding is required ii) insurance, where at least 33% Kenyan shareholding is required for a agents and a minimum of 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 leasing agricultural land v) listed companies, where 25% of their ordinary share must be reserved for investment by Kenyan nationals.
  1. 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 governmental inefficiencies. 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 neighbouring Somalia, investors will likely need to spend additional money on security and insurance when working in Kenya;

 

  • While a Kenya company can freely repatriate money 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 difficulty acquiring land in Kenya, due to lack of transparency and cumbersome regulations within the ministry of lands.
  • Companies in Kenya are likely to face infrastructural limitations due to their poor quality as well as inadequate supply. This hinders the growth of the companies from the beginning of their operations. Later, the companies are required to incur slightly high overhead expenses for equipping their offices with modern technology and infrastructure to overcome these limitations and run their businesses with ease.

 Best uses for Kenya company

  1. Business process outsourcing: Kenya’s low labour costs, English-speaking population and good educational standards makes it 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 outsourcing companies when it is complete. KTC is being build as part of Kenya’s Vision 2030 initiative.

 

 

Post Author: Raymond Nduga

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