Kenya company registration
12 March, 2014
In recent years, Kenya has become the preferred location in Eastern and Central African location for global investors. As a member of the East African Community, Kenya allows extended judicial protection through the East African Court of Justice for international trade with Uganda, Burundi, Rwanda, and Tanzania. Setting up a company in Kenya offers the following benefits:
1. Kenya company formation benefits from tax exemption through Export Processing Zones. These Export Processing Zones offer export-oriented foreign companies 10 year tax exemption.
2. Specifically, an EPZ enjoys i) a 10 year corporate income tax holiday ii) 10 year withholding tax holiday on repatriation of funds iii) indefinite exemption from VAT and customs import duty and stamp duty.
3. Kenya company registration in EPZ allows the benefit of no exchange controls with easy repatriation of capital and profits, access to begin currency accounts and domestic and offshore borrowing.
4. Any Kenya business setup registered within an EPZ is exempt from all licensing requirements, with only a single EPZ license required to conduct business. The Kenya business incorporation EPZA also fast tracks any EPZ projects, ensuring approval and licensing within 30 days.
5. The transportation industry is also an excellent investment opportunity, growing by 23% from 2006-2010, making Kenya attractive for international construction companies.
6. Kenya company registration is a great alternative to South Africa for entrepreneurs looking to enter the African region, due to lower business setup costs.
Foreign investors looking to setup business in Kenya should also be aware of the tax and accounting regulations in the country, to ensure the Kenya company meets all these requirements and operates legally:
1. Both resident and non-resident corporations are subject to income tax of 30% on taxable income;
2. A Kenya company formation is liable to pay a VAT rate of 16% on goods unless incorporated within an EPZ, in which case the VAT rate is reduced to 0% indefinitely;
3. The taxable income for a Kenya business setup is calculated on the audited accounting profit, as adjusted for tax purposes, for the accounting year ending in the preceding calendar year;
4. Kenya boasts a mere 7 double taxation treaties which fail to materially reduce the tax burden of foreign entrepreneurs interested in Kenya company formation;
5. Under corporate tax law, a Kenya company formation is liable to pay withholding tax on the following types of payment made to a non-resident: interest, royalties, contract and other service fees, lease rentals and technical fees. The rates of withholding are 10%, 15%, or 20% of the gross payment;
Also, investors should be aware that not all sectors in Kenya business setup allow 100% foreign ownership. Foreign ownership is restricted in the aviation, insurance, telecommunications and agricultural industries, with listed companies also facing restrictions.
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