External Company (ie a branch of a foreign company)
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.
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 7% 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 42%. There are no withholding taxes on remittance of branch profits.
In addition (for 1995 only) there is a drought levy of 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 and Northern Ireland, Norway, Zambia, Germany, Canada and India.
FOREIGN INVESTMENTS & EXCHANGE CONTROL
Kenya welcomes foreign investment. All business activities are open to foreign investors, and only the insurance industry requires any Kenyan co-ownership. The Exchange Control Act has been repealed. The Central Bank is responsible for supervision of the currency.
Residents may hold foreign currency accounts. Foreign exchange for eligible transactions is purchased from the commercial banks without any control. Eligible transactions include payments in respect of dividends, capital and interest on loans, current account transactions and proceeds on disposal of investments. There are no controls on foreign exchange rates or interest rates on loans and overdrafts. Exchange rates are driven largely by supply and demand.
The Monopolies Commission regulates the creation or strengthening of monopolies including acquisitions and take-overs 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.
Protection is provided for by statute.
There is a public registry for trade and service marks, designs and patents. Kenya is a signatory of the Paris and Berne Conventions.
Other than tax incentives with regard to companies established as developers or operators in export processing zones, there are no special tax incentives granted to foreign investors.
MEMBERSHIP OF INTERNATIONAL & REGIONAL ORGANISATIONS
Preferential Trade Area (PTA), Organisation of African Unity, United Nations Organisation and the British Commonwealth.
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. A new Arbitration Act has been enacted to bring Arbitration Law and Practice up to international standards. Interference by the Kenyan courts in the arbitral process is now excluded by statute unless otherwise agreed.
Legal Disclaimer: This information is not intended for use without professional advice
For further information please contact:
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 Click Contact Link
Or visit the Werksmans web site, at Click Contact Link
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