Kenya is an emerging nation in East Africa with a growing economy. The forestry, fisheries, and agriculture sectors are the three important areas in Kenya that contribute significantly to the nation’s rising GDP. The majority of Kenya’s exports are primarily made up of agricultural goods. Kenya’s crucial mineral export is soda ash, which is extracted from Lake Magadi in the Rift Valley and utilized in the production of glass.
The processing of agricultural products, steel products as well as the production of textiles and apparel are major businesses in the country and offer a vibrant business for potential entrepreneurs. In addition to that, Kenya also has rapidly expanding IT and telecommunications sectors. Kenya has experienced a respectable 5.7% yearly productivity expansion on average.
In fact, it is now recognized as one of Sub-Saharan Africa’s most attractive investment centers. In the World Bank’s Ease of Doing Business Assessment, Kenya was ranked 61st out of 190 nations. All of this demonstrates how advantageous it will be for business people to invest in Kenya’s diverse sectors.
This article will concentrate on the process for company registration in Kenya. It will cover the steps, required paperwork, prerequisites, benefits, and taxation for registering a business in Kenya.
Why register a company in Kenya?
- Kenya is regarded as Africa’s center for commerce, telecommunications, and financial institutions.
- Kenya’s economic measures encouraged investors to inject capital into commercial activities, resulting in earnings and jobs for the country’s citizens.
- The Kenyan government continually promotes international investment while also making significant investments in infrastructural development.
- Kenya offers incentives to businesses bringing in raw resources.
- In Eastern and Central Africa, Kenya possesses the most advanced share market.
- Kenya has a competent and efficient workforce.
- Kenya and numerous other nations have ratified agreements to prevent double taxation.
Procedure for Company Registration in Kenya
Kenya company registration can be done by using the following steps:
Step 1: Acquire the Kenyan ID
In order to register a company in Kenya, it is essential to secure Kenyan identification cards for the citizens of the country or foreign certificates, which are required for foreigners.
Step 2: Create an eCitizen account
In order to register a company in Kenya, you must create an eCitizen account. It is the main internet platform used by the Kenyan government for official operations. Your name and Kenyan ID number must be entered when setting up a personal profile. You can utilize your Foreigner Certificate number if you are a foreign citizen living in Kenya.
Step 3: Share a passport photograph
Before creating your eCitizen account, you must provide a proper picture of yourself. The photograph you upload should have been taken no more than six months prior to the time you register your business.
Step 4: Access the Business Registration Service on the main page
Choose the Business Registration Service, then move forward with the application. Select the chosen business type from the drop-down menu under “Business Name Application” on the website.
Step 5: Select and reserve a company name
It is essential to select and reserve a company name. However, the selected name must be unique and different from the name of already existing companies in Kenya.
In two working days, the Registration Service will respond with a decision on whether or not the name is approved. In the event that the name is permitted, the name can be reserved for a period of 30 days. Within this time period, you must complete company registration in Kenya.
Step 6: Complete the business application form CR1
You must fill out the application form CR1 and submit the necessary information along with it, such as the name of the business, its address, and the names and contact details of each director and investor.
Step 7: Fill out form BN6 to list the nominal capital holdings of your companies
All new enterprises are required by the Kenya Revenue Authority to disclose their capital holdings. On form BN6, specify the nominal capital holdings of your enterprises.
Step 8: Make payment for the Stamp Duty
The Kenya Revenue Authority (KRA) is in charge of collecting stamp duties. The stamp duty is determined by taking into account the corporate capital.
Step 9: Gather the company documents
The Memorandum and Article of Association have to be created before submitting your final registration documents. The Memorandum of Association contains information on your corporation’s name, address, and economic objective as well as the worth of every share and the number of stockholders. The company’s policies and guidelines are outlined in the Articles of Association.
Step 10: Submit the documents to the Kenyan Registrar’s office
Once all the documents have been created and gathered, they must be submitted along with the form CR1 for Kenya company registration to the Registrar’s office. This documentation can either be mailed or personally delivered.
Step 11: Paying the required fees
The last step for company registration in Kenya is to pay the required fee of Kes. 10,650. The government offers different methods of payment, including via the e-Citizen website and other forms of payment at the Registrar’s office.
Documents Required for Kenya Company Registration
The documents that must be submitted in order to register a company in Kenya are:
- Form for registering the organization
- Memorandum of Association of the corporation
- Articles of Association of the corporation
- Copies of passports, identity documents, address proof, and contact information for the stockholders and directors.
- Declaration of Nominal Capital
Eligibility Criteria for Company Registration in Kenya
- Shareholder: In the case of a Private Limited Company, there must be at least 1 shareholder who can be of any nation to register a company in Kenya. However, at least 7 shareholders are required for public limited company registration in Kenya.
- Director: A minimum of one director is essential for Kenya company registration as a Private Limited Company. A minimum of 2 directors is essential for Kenya company registration as a Public Limited Company.
- Minimum share capital: It is not necessary to have a certain amount of share capital for company registration in Kenya.
- Local registered address: The business is required to have a local registered office.
- Corporate Secretary: In order to register a company in Kenya, employing a corporate secretary is required.
Different Business Structures for Kenya Company Registration
The different business structures available for company registration in Kenya are:
1. Sole Proprietorship
They are the simplest form of business structure in Kenya because of the simplicity and ease with which they can be established in the country. Such businesses have a sole owner who is solely accountable for all the debts and responsibilities of the firm.
2. Limited Liability Partnerships
Limited Liability Partnerships incorporate aspects of a partnership and a firm. They protect the other members from the negligence of the other members by holding each partner personally responsible for their actions or misconduct.
A Limited Liability Partnership’s key benefit is that it is a tax-transparent organization. As a result, any revenue received through partnerships is automatically taxable at the partner levels and is required to be reported on individual or company income tax returns.
3. Private Limited Company
A Private Limited Company is the most popular type of corporate structure utilized by domestic and international business proprietors to register a company in Kenya. A private limited company must have a minimum of one director and one shareholder from any country and can have up to 50 members.
4. Public Limited Company
A Public Limited Company can be formed with as few as 7 shareholders and 2 directors, and there is no maximum number, and shares of the corporation may be purchased and sold by the public. Both the Nairobi Securities Stock Exchange and the Over The Counter (OTC) market allow trading of the corporation’s shares. In addition to that, the business must produce its audited account statements and annual reports and submit them to the Registrar of Companies.
5. Branch Office
The branch office is permitted to issue regional customer invoices, execute local sales contracts, and collect client payments. The branch office will, nevertheless, need to acquire the requisite licenses in order to conduct commercial operations in the country. The branch office must nonetheless designate a resident representative in Kenya.
Advantages of Company Registration in Kenya
1. Export Processing Zones
Kenya has 7 Export Processing Zones that are excellent for international entrepreneurs who are focused on exports. The advantages of an EPZ corporation in Kenya include:
- Being lawfully exempted from paying corporate income tax and withholding tax for a maximum of ten years.
- Exemption from VAT, import taxes, and stamp fees for an indefinite period of time
- It can function with just one license, which will be authorized in a month.
2. Effective transportation facilities
In comparison to other East African nations, Kenya has an excellent network of roadways, railways, and port infrastructure, notably Mombasa Port which makes it makes it more convenient for business persons in the nation.
3. Simple to register a business
Company registration in Kenya is fast and simple as long as the necessary documentation criteria are met. The Kenyan government manages a number of organizations that help with company incorporation, licensing, and supportive services, streamlining the process of company establishment in the country.
Taxes for Businesses in South Africa
Those entrepreneurs who have done company registration in Kenya are required to pay the country’s different business taxes.
The taxes that businesses must pay are listed below.
- Corporate Income Tax- This type of income tax is assessed on the annual revenue of business entities. For resident businesses, even those that are subsidiaries of international parent corporations, the corporate income tax rate is 30%. For Permanent Establishments and international company branches, the corporate income tax rate is 37.5%.
- Pay As You Earn (PAYE)- All compensation (monetary and non-monetary) given to or delivered to workers by commercial enterprises must be subject to PAYE deduction and accounting. Individuals who live in Kenya are subject to tax on their worldwide earned revenue. Tax rates under PAYE range from 10% to 30%.
- Value Added Tax (VAT)- Kenya has three different VAT rates: 16%, 0%, and exempt.
Conclusion
The Kenyan economy has expanded considerably over the last few years. The nation has several advantages, including a highly skilled labor force and a crucial port that acts as a gateway to numerous nations on the African continent. Among East African nations, Kenya is often considered a financial, industrial, and logistical center. A strong manufacturing and tourism sector in Kenya is one of the reasons for the country’s ability to draw in a substantial amount of capital. These factors make Kenya one of the greatest places for incorporating a firm.
If you want to register a company in Kenya, you can consult our business formation specialists at OnDemand International. Our professionals will walk you through each stage of the incorporation process.
FAQ’s
- Form for registering a corporation
- Memorandum of Association of the corporation
- Articles of Association of the corporation
- Details of the stockholders and directors.
The average price to register a company in Kenya is 10,650 Kenyan Shillings.
The Kenyan government continually promotes international investment while also making significant investments in infrastructural development. The nation is also regarded as Africa’s center for commerce, telecommunications, and financial institutions and has a competent and efficient workforce.
For resident businesses, even those that are subsidiaries of international parent corporations, the corporate income tax rate is 30%. For Permanent Establishments and international company branches, the corporate income tax rate is 30%.
The nation has several advantages, including a highly skilled labor force and a crucial port that acts as a gateway to numerous nations on the African continent. In addition to that, the nation also has Export Processing Zones.
Your name and a Kenyan ID number, if you’re a resident, or a Foreigner Certificate number, if you’re a foreigner, are needed to register an eCitizen account.
