1.1   Type of Government -

1.2   Forms of Business Organisation -

1.3   Formation of a Business -

1.4   Taxation

1.5   Foreign Investments and Exchange Control

1.6   Regulatory Environment

1.7   Intellectual Property

1.8   Registries

1.9   Incentives

1.10   Membership of International and Regional Organisations

1.11   Settlement of Disputes



In 1992 a network of law firms in Africa called "Lex "Africa" was born. After three years of successful operation, the network has been expanded. It now includes 12 members in important African countries. As part of an information service, Werksmans distributes a newsletter entitled "The Gateway" in which is discussed various topics on doing business in the various African countries. Below is the first of such series.


1.1 Type of Government -

Multi party democracy.

1.2 Forms of Business Organisation -

  • Private or public limited liability company
  • Joint venture
  • External company (ie a branch of a foreign company)
  • Partnership/limited partnership
  • Sole trader

1.3 Formation of a Business -

Companies and external companies (branches) must be registered with the authorities in Nairobi.

A business generally has to register for various tax purposes, National Social Security Fund and National Hospital Insurance Fund. Business licences including trade licences are required for certain activities.

1.4 Taxation

Tax is levied on income of any person whether resident or not which is deemed to have accrued in or was derived from Kenya. The resident corporate tax rate is 35%. In addition, there is a resident withholding tax of 10% (to be 71/2% from 1 January 1996) of the amount of qualifying dividend payable. The non-resident withholding tax rate on dividends is 10% of the amount payable. The non-resident corporate tax rate is 421/2%. There are no withholding taxes on remittance of branch profits.

In addition (for 1995 only) there is a drought levy of 21/2% and a number of specific taxes and duties.

Capital gains tax has been suspended. There is, however, a dividend compensating tax which is required to be paid by a corporate body which pays dividends out of untaxed profits.

Kenya has double tax agreements with Sweden, Denmark, United Kingdom (Great Britain and Northern Ireland), Switzerland, Norway, Zambia, Germany, Canada and India.

1.5 Foreign Investments and Exchange Control

Kenya generally welcomes foreign investment. Virtually all business activities (other than "strategic" industries) are open to foreign investors. Exchange control on acquisitions and disposals of investments, borrowings and payments has been suspended. Foreign exchange for eligible transactions is purchased from the commercial banks. Eligible transactions include payments in respect of dividends, capital and interest on loans and proceeds on disposal of investments.

Foreign exchange rates and interest rates on loans and overdrafts have been decontrolled.

There has been a fundamental shift in the responsibility of administering exchange control from the Central Bank of Kenya to the commercial banks.
The Exchange Control Act is shortly to be repealed.

1.6 Regulatory Environment

The Monopolies Commission regulates the creation or strengthening of monopolies including acquisitions and takeovers of businesses where a change in control occurs between independent persons engaged in similar activities.

There are statutory Capital Markets Authority and Nairobi Stock Exchange regulations governing issues and dealings in securities listed on the Nairobi Stock Exchange.

1.7 Intellectual Property

Protection is provided for by statute.

1.8 Registries

There is a public registry for trade and service marks, designs and patents. Kenya is a signatory of the Paris and Berne Conventions.

1.9 Incentives

There are considerable tax incentives with regard to companies established as developers or operators in Export Processing Zones. There are simplified procedures on payments for imports.

1.10 Membership of International and Regional Organisations

Preferential Trade Area (PTA), Organisation of African Unity, United Nations Organisation and the British Commonwealth.

1.11 Settlement of Disputes

There is provision for enforcement in Kenya of certain foreign judgements and arbitration awards. Kenya is a signatory and has adopted the 1923 Protocol on Arbitration Clauses of the League of Nations and the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

"Nothing in this article should be construed as legal advice from any lawyer of Werksmans. The article is a general summary of developments or principles of interest, and may not apply directly to any specific circumstance. Professional advice should therefore be sought before action based on any information is taken."

For further information please contact: 

Werksmans Attorneys 

Werksmans Chambers, 22 Girton Road, Parktown, Johannesburg 2193 
P.O. Box 927, Johannesburg 2000 South Africa

Enquiries:        Mr Charles Butler
Telephone         27 (011) 488-0000
Telefax           27 (011) 484-3100/3200
E-Mail Address

Or you can visit the Werksmans web site, at  Click Contact Link