Doing Business in Kenya: Tax, Law & Investment Guide

Kenya combines an established common-law legal system with one of the region's more detailed merger-control regimes and a tax code that has shifted meaningfully in 2025, including new minimum top-up tax rules for large multinationals and a repealed minimum tax. For investors, the country's appeal rests on flexible foreign exchange rules, no minimum share capital for most private companies, and a genuinely functioning competition authority — offset by some of the more complex merger-notification thresholds in the region. This overview lays out the country's economic position, its legal and institutional structure, and the practical steps and risks involved in setting up a business there.

Kenya has the largest economy of the four East and Central African markets covered in this series. Nominal GDP stands at USD 131.67 billion, with GDP per capita at USD 2,467.92 and inflation comparatively low, at 4.06%. Government revenue equals 17.60% of GDP, while government net debt sits at 68.34% of GDP. On risk metrics, Kenya scores 165 out of 211 on the S&P Global Market Intelligence Overall Country Risk index and ranks 121 out of 180 on the Corruption Perceptions Index.

The main industries are agriculture, transportation, services, manufacturing, construction, telecommunications, tourism, and retail. Its leading export partners are Uganda, the United States, the United Arab Emirates, the Netherlands, and Pakistan, with tea, cut flowers, garments, gold, and tropical fruits as the principal export commodities. Its main import partners are China, the United Arab Emirates, India, Saudi Arabia, and Malaysia, importing chiefly refined petroleum, palm oil, wheat, plastics, and garments.

Kenya is a presidential republic in which the president serves as both head of state and head of government. The president is directly elected by qualified majority vote for a five-year term, renewable once, and nominates a cabinet subject to National Assembly approval. Parliament is bicameral. The superior courts are the Supreme Court (the highest court), the Court of Appeal, and the High Court — which itself includes the Employment and Labour Relations Court and the Environment and Land Court — while the subordinate courts comprise the Magistrates' Courts, Kadhis' Courts, and the Courts Martial. The next general and presidential elections are scheduled for August 2027.

Kenya's legal system is based on English common law, Islamic law, and customary law. Disputes may be resolved through court litigation, arbitration, court-annexed mediation, or (for employment and economic disputes) negotiation and conciliation. Commercial litigation is handled by the Commercial and Tax Division of the Milimani High Court, and Kenya's Arbitration Act, 1995 embodies most of the provisions of the UNCITRAL Model Law.

Kenya belongs to a wide set of regional and multilateral bodies, including the African Continental Free Trade Area Agreement, the African Development Bank Group, the African Union, COMESA, the Commonwealth, the East African Community (EAC), the Group of 15, the Group of 24, the Group of 77, the Intergovernmental Authority on Development, the IMF, the Organisation of African, Caribbean and Pacific States, the United Nations, the World Bank Group, and the World Customs Organization. It also receives preferential trade treatment under a set of agreements listed on the WTO's preferential trade agreement database.

Bilateral investment treaties are in force with Burundi, Finland, France, Germany, Japan, Kuwait, the Republic of Korea, Singapore, Switzerland, the United Arab Emirates, and the United Kingdom. Treaties have also been signed — but are not yet in force — with China, Iran, Libya, Mauritius, Qatar, Slovakia, and Türkiye.

On the investment side, Kenya participates in the African Growth and Opportunity Act — which expired on 30 September 2025, with its renewal under consideration by the United States — the Samoa Agreement (successor to the Cotonou Agreement), the Multilateral Investment Guarantee Agency, the United States-Kenya Strategic Trade and Investment Partnership, and the World Trade Organization. For dispute resolution, Kenya is party to the New York Convention, the ICSID Convention, the Permanent Court of Arbitration, and the UNCITRAL Model Law.

Land

Under the Constitution of Kenya, 2010, land is classified as public, community, or private. Non-agricultural land carries no restrictions on foreign-owned companies leasing or owning it, but foreigners may only hold land on a leasehold basis, capped at a maximum of 99 years. Foreigners cannot own agricultural land at all, except by presidential discretion, which is rarely granted — though there is an established mechanism for foreigners to own agricultural land indirectly through a non-private company.

Merger control and competition law are governed by the Competition Act, 2010, enforced by the Competition Authority of Kenya (CAK). A merger is defined as an acquisition of shares, business, or other assets — inside or outside Kenya — that results in a change of control of a business, part of a business, or a business asset in Kenya, including a takeover; the Act separately sets out examples of what constitutes control for these purposes.

Notification is mandatory where any of four thresholds are met: the merging undertakings have a minimum combined turnover or assets (whichever is higher) in Kenya of KES 1 billion, with the target's turnover or assets (whichever is higher) exceeding KES 500 million; the acquiring undertaking's turnover or assets (whichever is higher) in Kenya exceed KES 10 billion and the parties are in the same market or could be vertically integrated (unless the transaction instead meets the COMESA Merger Notification Thresholds); in the carbon-based mineral sector, where the value of reserves, rights, and associated assets to be held as a result of the merger exceeds KES 10 billion; or where the undertakings operate in COMESA, meet the COMESA Merger Notification Thresholds, and generate or locate two-thirds or more of their turnover or assets (whichever is higher) in Kenya. Transactions falling between KES 500 million and KES 1 billion in combined Kenya turnover or assets (whichever is higher) — or, in the carbon-based mineral sector, where the reserve/rights/asset value also exceeds KES 10 billion — require only a limited application to the CAK for exclusion from full notification, rather than mandatory notification itself. Transactions where the combined Kenya turnover or assets (whichever is higher) does not exceed KES 500 million, or that meet the COMESA threshold with less than two-thirds of turnover or assets generated or located in Kenya, require neither notification nor an exclusion application.

Filing fees for mandatory notifications run on a sliding scale between KES 1 million and KES 4 million; exclusion applications carry no fee. The CAK weighs public interest, among other factors, in its determinations, and Kenya operates a pre-implementation regime — approval must be obtained before a qualifying transaction is implemented. Implementing a merger in contravention of the Act is an offence carrying up to five years' imprisonment or a fine of up to KES 10 million (or both), and the CAK may separately impose a penalty of up to 10% of the undertaking's combined gross annual turnover in Kenya for the preceding year.

Kenya is a member of two regional competition bodies — COMESA and the EAC. The EAC has an operational competition law regime, but its merger-control function is not yet functional; COMESA, by contrast, has an operational merger-control regime, making it the more relevant regional framework for merger activity involving Kenya.

Separately, the Competition Act prohibits horizontal and vertical agreements, decisions by associations of undertakings, and concerted practices that have the object or effect of preventing, distorting, or lessening competition in Kenya, unless exempt or part of a single economic entity. Cartel conduct (price fixing, market division, collusive tendering) and minimum resale price maintenance are prohibited, as are abuses of dominance and buyer power. The CAK operates a corporate leniency programme for firms that voluntarily disclose prohibited conduct and cooperate with its investigations. A firm engaging in a restrictive agreement or abusing a dominant position commits an offence carrying up to five years' imprisonment or a fine of up to KES 10 million, or both. The EAC and COMESA also regulate prohibited practices within their respective common markets.

Foreign investment is governed by the Investment Promotion Act, 2004. The Kenya Investment Authority (KenInvest) promotes and facilitates investment by issuing investment certificates and helping investors secure licences, permits, and tax incentives. Applying for an investment certificate is not mandatory, but a foreign investor putting in at least USD 100,000 (or the equivalent in any currency) may apply, and a certificate holder becomes entitled to business licences for their undertaking, a specified number of work permits for expatriate staff, and certain tax incentives.

Available entity types are limited to a limited liability company (private or public), a branch office of a company registered outside Kenya, and a co-operative.

For the private limited liability company — the most commonly used vehicle — the requirements are:

Beyond incorporation, businesses must also secure a valid unified business permit from the relevant County Government (the Nairobi City County for Nairobi-based businesses), which is applied for online and consolidates five separate permits — the single business permit, fire clearance certificate, advertising signage, health certificate, and food hygiene — into one; a separate permit is needed in every region where the business operates. Companies must also register with the Kenya Revenue Authority (KRA) for a Personal Identification Number, and separately for VAT if turnover exceeds the relevant threshold; with the National Social Security Fund (NSSF) once the first employee is hired; for the Social Health Insurance Fund (SHIF), which is mandatory for any employer with employees; with the National Industrial Training Authority (NITA) within 30 days of becoming an employer; and with the Directorate of Occupational Safety and Health Services (DOSHS) for a workplace registration certificate covering each premises used. Industry-specific licences may also apply.

Investment incentives

Kenya's incentives include a 100% investment deduction where cumulative investment outside Nairobi City County and Mombasa County over the preceding three years reaches at least KES 1 billion, or a 100% deduction on investments of at least KES 250 million made outside those two counties (or in a special economic zone) in the relevant year; various incentives for entities operating in special economic zones (SEZs) or export processing zones (EPZs), including reduced corporate tax rates, no withholding tax on dividends, reduced withholding on other payments, and VAT zero-rating; a tax rebate for employers who take on at least 10 university, technical, or vocational graduates as apprentices for six to twelve months in a given year; incentives available under special operating framework agreements with government; and reduced tax rates for defined periods for companies constructing at least 100 residential units annually, assembling motor vehicles locally, operating a certified carbon market exchange or emissions trading system, operating a shipping business, or manufacturing human vaccines.

Two further incentives took effect from 1 July 2025: start-up companies certified by the Nairobi International Financial Centre Authority (NIFCA) now qualify for a reduced corporate income tax rate of 15% for their first three years and 20% for the following four; existing NIFCA-certified companies qualify for 15% for their first 10 years and 20% for the next 10, provided they invest at least KES 3 billion in Kenya within their first three years, operate as a holding company with at least 70% of senior management being Kenyan citizens, and base their regional headquarters in Kenya with at least 60% of senior management being Kenyan citizens. From the same date, dividends paid by a NIFCA-certified company are tax-exempt where the company reinvests at least KES 250 million in Kenya in that income year.

Exchange control

Kenya imposes no exchange control restrictions, though commercial banks must report any foreign exchange transaction exceeding USD 10,000 to the central bank.

Tax

Kenya uses a source-based tax system: both residents and non-residents are taxed on income earned from a source in Kenya. A company is resident in Kenya if it is incorporated under Kenyan law, has its management and control exercised in Kenya during the relevant assessment year, or has been declared a tax resident by the Cabinet Secretary for National Treasury and Planning via a notice in the Kenya Gazette.

The standard corporate income tax rate is 30%. Businesses with turnover above KES 1 million but not exceeding (or not expected to exceed) KES 25 million in a given income year instead pay a 3% turnover tax in place of corporate income tax. A previous 1% minimum tax on gross turnover, which applied where a taxpayer's instalment tax was lower than the minimum, was repealed effective 1 July 2025. Separately, effective 1 January 2025, resident persons or permanent establishments that are part of multinational groups with consolidated annual turnover of EUR 750 million or more are subject to a minimum top-up tax in specific circumstances, to bring their effective rate up to the 15% global minimum.

Capital gains tax applies at 15% on net gains from the transfer of property situated in Kenya, reduced to 5% for gains on the transfer of investments by NIFCA-certified companies (subject to conditions). Taxable assets include property held for investment purposes — land, buildings, marketable securities, mining rights, and interests in petroleum agreements — but exclude machinery and motor vehicles.

Withholding tax rates, which may be reduced under an applicable double tax agreement, are as follows:

Double tax agreements are in force with Canada, Denmark, France, Germany, India, Iran, Norway, Qatar, the Republic of Korea, Seychelles, South Africa, Sweden, the United Arab Emirates, the United Kingdom, and Zambia.

Losses could previously be carried forward indefinitely, but effective 1 July 2025 the carry-forward period is limited to five years; losses may only be set off against income from the same source, and capital losses are non-deductible. Under Kenya's transfer pricing rules, transactions between related enterprises must be conducted at arm's length — enterprises are related where one participates, directly or indirectly, in the management, "control," or capital of the other, or a third party does so for both; "control" is broadly defined to include holding at least 20% of voting rights, or having authority to appoint more than half the board or at least one executive director.

Interest deductibility on loans from non-resident persons is capped at 30% of EBITDA, with exemptions for banks and financial institutions, microfinance institutions, hire-purchase entities, non-deposit-taking lending and leasing institutions, holding companies regulated under the Capital Markets Act, and human vaccine manufacturers. Excess disallowed interest may be carried forward for three years.

Resident individuals are taxed on a progressive scale:

Employers and employees both make monthly social security contributions to the NSSF, currently at 6% each under the two-tier contribution system, though the government is implementing a graduated five-stage plan (set out in the Third Schedule to the National Social Security Fund Act, 2013) to progressively raise these mandatory rates over time. There is no payroll tax in Kenya. Employees separately contribute 2.75% of gross monthly salary to the SHIF, and both employer and employee contribute 1.5% of the employee's monthly gross salary each to the Affordable Housing Levy. Employers also pay a national industrial training levy of KES 50 per employee per month to NITA, though employers with fewer than 100 employees are exempt for the first 12 months after registering the business.

Stamp duty is levied under the Stamp Duty Act (Cap 480) on a range of instruments, including property conveyances and transfers, sales of stock or marketable securities, mortgages, bonds, debentures, covenants, and partnership instruments. Share transfers are taxed at 1% of sale value (shares listed on the Nairobi Securities Exchange are exempt), and immovable property transfers are taxed at 4% within municipalities and 2% outside them.

VAT is levied at 16% on the supply of goods and services and on imports. Registration is mandatory once a person's taxable supplies reach or are expected to reach KES 5 million in a 12-month period; non-resident suppliers of digital services delivered over the internet, an electronic network, or a digital marketplace must register regardless of whether they meet that threshold. Certain KRA-designated persons must withhold VAT at 2% of the taxable value of supplies made to them. Resident companies must account for output VAT on taxable imported services from non-residents via a reverse-charge mechanism, where the registered person would not otherwise be entitled to a full input tax credit; non-residents without a permanent establishment who render services to Kenyan customers through a digital market must register for VAT (or appoint a local tax representative), even where their supplies fall below the KES 5 million threshold.

Expatriates working in Kenya for more than six months need a work permit; those working less than six months need only a special pass. Once a work permit is issued, the expatriate must also apply for an alien card (residence certificate). Employers must justify appointing an expatriate over a Kenyan national, ensure expatriates are understudied by local employees, and maintain a list of the number and qualifications of expatriates in their employment. Work permits are granted at the discretion of the Director-General of the Directorate of Immigration Service for up to five years, though most are issued for two years in practice; the Immigration Act differentiates permits by class and sector, including mining, prescribed professions, manufacturing, employment, and consultancy.

Secondment to Kenya is legally permitted without requiring employment by a local entity, though a Kenyan company must sponsor the individual's work permit (or special pass) application, which in practice means local employment may still be required for that purpose. Fixed-term contracts are allowed under the Employment Act, 2007, though an extended fixed-term contract risks being reclassified as one of indefinite duration. Labour broking is permitted provided the broker is registered as an employment agency under the Labour Institutions Act, 2007, and enters into a valid employment contract with the employee. Remuneration may be paid in foreign currency, but must be converted to local currency to settle the relevant taxes. Restraint-of-trade agreements are valid and enforceable in Kenya, subject to a reasonableness test under the Contracts in Restraint of Trade Act (Cap 24) — considering the nature of the profession, trade, or occupation, geography, age, and duration — and are, in practice, most often enforced where an employee holds confidential or proprietary information.

Intellectual property: trade marks

Kenya's trade mark regime is notably broad in scope: provision is made for goods and service marks, certification marks, defensive marks, series marks, and collective marks. Classification follows the Nice Classification, and — unlike some neighbouring jurisdictions — a single application may cover any number of classes of goods or services.

Filing requires full particulars of the applicant, a duly completed and simply signed Power of Attorney, prints of the mark, and a certified copy of the priority document where applicable. Applications are examined for inherent registrability and conflicts with prior registrations or applications; accepted applications are published in the Industrial Property Journal or the Kenya Gazette for opposition purposes. Opposition may be lodged within 60 days of advertisement, extendable at the Registrar of Trade Marks' discretion up to a maximum of 90 days. If no opposition is raised within the statutory period, or any opposition is decided in the applicant's favour, the Kenya Industrial Property Institute registers the mark, issues a certificate, and enters it in the register. A registered mark may be cancelled if it has not been used for a continuous period of five years after registration. Registration is valid for an initial 10 years from the filing date and renewable for further 10-year periods. Kenya participates in the Madrid Agreement, the Madrid Protocol, the Nairobi Treaty, the Paris Convention, the Trade Mark Law Treaty, the WIPO Convention, and WTO/TRIPS.

1. Choose the entity type. A private limited liability company is the standard vehicle, requiring only one shareholder and one director, with no minimum share capital in most sectors.

2. Register with the Registrar of Companies, budgeting two to three weeks for the process, and consider whether an investment certificate from KenInvest is worthwhile if investing at least USD 100,000.

3. Secure the unified business permit from the relevant County Government before commencing operations, and obtain a PIN from the KRA, registering separately for VAT once turnover approaches the KES 5 million threshold.

4. Register with the NSSF, SHIF, and NITA before or immediately upon hiring the first employee, and register each workplace premises with the DOSHS.

5. Budget for the layered payroll contributions — 6% NSSF from both employer and employee (rising under the graduated plan), 2.75% SHIF from the employee, 1.5% Affordable Housing Levy from each side, and the KES 50 per employee monthly NITA levy.

6. Confirm which 2025 tax changes apply, since several took effect during the year covered by the source document: the loss carry-forward period is now capped at five years, the 1% minimum turnover tax was repealed, and large multinational groups face a new minimum top-up tax regime.

7. File trade mark applications in Kenya, taking advantage of the ability to cover multiple classes in a single filing.

8. Line up work permits early for expatriate staff, sizing timelines against the Director-General's discretion and the practical norm of two-year permits.

9. For any merger or acquisition, map the transaction against Kenya's four-part notification threshold test and the COMESA Merger Notification Thresholds together, since the two regimes interact directly with each other under the Competition Act.

Key risks to watch

• Kenya's merger-notification framework is genuinely complex, with four separate qualifying thresholds that interact with COMESA's own regime — transactions should be mapped carefully rather than assumed to fall outside scope.

• Several tax rules changed materially during 2025: the minimum turnover tax was repealed, the loss carry-forward period was newly capped at five years, and a minimum top-up tax now applies to large multinational groups — businesses should confirm which version of the rules applies to their specific facts.

• AGOA — a preferential trade arrangement Kenya has relied on — expired on 30 September 2025, with renewal still under U.S. consideration as of the source document's date.

• Foreign investors cannot own agricultural land outright; access is generally limited to leasehold tenure (maximum 99 years) or indirect ownership through a non-private company.

• Restraint-of-trade clauses are enforceable in Kenya (unlike in some neighbouring jurisdictions), which cuts both ways — they can protect a business's interests, but need to be reasonably scoped from the outset to survive a reasonableness challenge in court.