Kenya Corporate Tax - Guide for International Expansion

Expanding your business to Kenya? Understanding the country's corporate tax landscape is crucial for successful operations in East Africa's largest economy. Kenya offers a strategic gateway to the region with its well-developed infrastructure and business-friendly policies.

Kenya's corporate tax system is administered by the Kenya Revenue Authority (KRA), which has modernised tax collection through digital platforms. Whether you're establishing a manufacturing base, setting up a regional headquarters, or exploring Kenya's growing tech sector, grasping your tax obligations will help ensure smooth business operations. Wise Business can help streamline your financial operations with local currency accounts and cost-effective international transfers.

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*This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional. *

Kenya Corporate tax rate in 2025

The standard corporate income tax rate in Kenya is 30% for resident companies. This rate applies to companies incorporated in Kenya or those with their place of effective management in Kenya. The rate has remained stable, providing predictability for businesses planning their operations.¹

Non-resident companies with a permanent establishment (branch) in Kenya are subject to a standard corporate tax rate of 30% on their taxable profits.¹ However, a separate 15% tax is imposed on the repatriation of profits by these branches, which significantly affects the overall tax burden for foreign entities benefiting from the local market.²

Kenya offers preferential rates for specific sectors to encourage investment. Manufacturing companies operating under the Special Economic Zones (SEZ) regime enjoy a reduced corporate tax rate of 10% for the first 10 years, followed by 15% for the next 10 years. Companies in Export Processing Zones (EPZ) benefit from a 10-year tax holiday (0% CIT), followed by a 25% corporate tax rate for the next 10 years.¹

How to pay corporate tax in Kenya

Kenya has modernised its tax administration through the iTax system, an online platform that handles all tax-related transactions. All companies must register for corporate tax through this system and file their returns electronically.³

The corporate tax year in Kenya runs from 1st January to 31st December. Companies must file their annual returns and pay any outstanding tax by 30th June of the following year.⁴

Companies are required to make quarterly instalment payments based on their estimated annual tax liability. These instalments are due on 20th April, 20th June, 20th September, and 20th December.⁴ Late filing of returns incurs a penalty of KES 20,000 or 5% of the tax due, whichever is higher. Interest on late payments is charged at 1% per month on the outstanding amount.⁵

Let's calculate the annual tax liability for a company with a turnover of KES 225 million (approximately £1.5 million). Assuming a profit margin of 10%, the taxable profit would be KES 22.5 million.

At Kenya's standard corporate tax rate of 30%, the tax liability would be:

KES 22.5 million × 30% = KES 6.75 million

When expanding your business to Kenya, the right financial tools will make the process smoother. Using a platform like Wise Business makes it easy to manage international finances. A multi-currency account allows businesses to pay for incorporation costs, registration fees, and government taxes in local currency without paying high exchange rate fees.

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Tax Compliance in Kenya

Register and Stay Updated with KRA:⁶

• Ensure your business is registered with KRA and your PIN is active.
• Corporate Tax: File annually within six months of your financial year-end.
• VAT: File monthly by the 20th if turnover exceeds KES 5 million.
• PAYE: File and pay by the 9th of every month.
• Turnover Tax: Pay monthly if turnover is under KES 5 million.
• Penalties range from KES 10,000 to 25% of the unpaid tax, plus interest.
• Using the best corporate tax software can help streamline filings and avoid errors.

File Annual Returns with BRS:⁷

• All companies must submit Annual Returns within 30 days of their incorporation anniversary.
• Late filing attracts a KES 5,000 penalty per year and risk of deregistration.

Register with NSSF and NHIF:⁷

• Employers must register employees with NSSF for pension contributions and NHIF (Social Health Insurance Fund) for health coverage.
• Contributions are 2.75% of employee gross income, remitted monthly by the 9th.

Annual Returns and Statutory Compliance:

• Companies must disclose: current directors and shareholders, share capital structure, registered office address, and any changes during the year.
• A thorough compliance ensures eligibility for benefits and corporate tax exemptions where applicable, while avoiding penalties.

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International Expansion to Kenya

Entering new markets in Kenya is exciting, but success depends on understanding the local business and financial framework. It is the fourth-largest in Sub-Saharan Africa with a GDP of USD 60 billion. Its strategic position in the East African Community (EAC) makes it the dominant economy in the region, contributing approximately 50% of the EAC’s GDP.⁸

Businesses in this country can access a market of nearly 500 million consumers through regional trade blocs such as the African Continental Free Trade Area (AfCFTA). The country’s strong economic fundamentals, including a 5% GDP growth in 2023 despite global financial pressures, highlight its resilience and investment potential.⁹

A key advantage for businesses considering expansion to Kenya is its youthful, skilled, and digitally connected population. Approximately 70% of the population is under 35, with an impressive literacy rate of 82%.¹⁰ Internet penetration is high, with 72% of Kenyans online, supporting growth in digital and knowledge-driven sectors. The rising middle class and rapid urbanisation, projected to reach 50% by 2050, drive demand for high-value goods and services, creating opportunities for local and international investors.⁸

Moreover, recent corporate tax reforms and regulatory improvements have strengthened Kenya’s investment climate. The government has removed VAT on exported services, allowed tax offsets for verified refund claims, and abolished tax on unrealised gains for startup share allocations.⁹

To establish your venture in Kenya:¹¹

• Conduct market research to understand Kenya’s business environment and target audience.
• Draft a tailored business plan suited to the local market.
• Select a suitable legal structure for your company.
• Register the company with a local address in Kenya, which is the official location for legal notices and government correspondence.
• Appoint a local director or company secretary, as Kenyan company law requires.
• Register with the Kenya Revenue Authority for taxes, including PAYE and VAT (if applicable).
• Open a corporate bank account to manage business finances.
• Leverage Kenya’s robust infrastructure:¹⁰

• [ ] Four international airports, including Jomo Kenyatta International Airport.
• [ ] Two seaports, including Mombasa Port.
• [ ] Standard Gauge Railway (SGR) can handle up to 22 million tons of cargo annually.

These measures help businesses navigate Kenya’s tax and regulatory framework while tapping regional opportunities.Setting up a local bank account and managing operations at a market-driven Kenyan Shillings (KES) exchange rate ensures smooth financial transactions and compliance.¹²

Incorporation of Business in Kenya

Incorporating a business in Kenya is done online through the eCitizen portal via the Business Registration System (BRS). Foreign investors must create an eCitizen account to register a local company, after which they receive a Certificate of Incorporation and a CR 12 document listing directors and shareholders.¹³

To complete registration, companies must submit the following:¹³

• Signed notice of registered address (CR8) indicating the official company address in Kenya.
• Signed company registration form (CR1) detailing company name, type, directors, and shareholding.
• Signed memorandum of a company with share capital (CR2) stating objectives, business scope, and share structure.
• Statement of nominal capital declaring authorised share capital and share distribution.
• Register of beneficial owners (BOF1) listing individuals with ultimate company control.
• National ID copies are required for local directors/shareholders, and passports are required for foreign directors/shareholders.
• The package includes a list of shareholders and directors (CR12), a KRA PIN certificate, a tax compliance certificate, and a KRA recommendation letter.
• Tax agent appointment and acceptance letters.
• Bank statements to verify financial standing.
• Notarised certificate of incorporation (for foreign branches/subsidiaries).
• Employer registration form with NSSF and local business permit.

Business Entities in Kenya

Company registration is governed by the Companies Act 2015. Key entity types include:^{11 14}

• Private Limited Company (Ltd): Liability limited to unpaid shares; maximum 50 members; cannot invite public subscription.
• Public Limited Company (PLC): Can invite the public to subscribe to shares; members can freely transfer shares; must include “PLC” in the name.
• Company Limited by Guarantee (CLG): Primarily for non-profits; members are guarantors, no share capital.
• Limited Liability Partnership (LLP): Combines features of companies and partnerships; enjoys separate legal personality.
• Limited Partnership: At least one General Partner with unlimited liability and one Limited Partner with liability limited to capital contribution.
• Foreign Company: A company branch registered outside Kenya that operates locally.

After incorporation, companies must register for taxes with the Kenya Revenue Authority (KRA), including international tax obligations. Businesses can file corporate tax returns online, access the local tax helpline, and plan according to global corporate tax standards. Proper registration and compliance enable smooth operations, access to incentives, and a robust foundation for scaling in Kenya’s growing market.

International corporate tax best practices

Successful international tax management requires a strategic approach that balances compliance with efficiency. Companies operating across borders should maintain robust documentation systems that clearly track income sources, expenses, and transfer pricing arrangements.

Understanding Kenya's double taxation agreements is crucial for optimising your tax position. Kenya has signed DTAs with over 20 countries, including the UK, India, South Africa, and several European nations. These agreements help prevent double taxation and provide mechanisms for tax relief on cross-border transactions.

Transfer pricing regulations in Kenya require companies with related-party transactions exceeding KES 50 million annually to prepare detailed documentation. This includes maintaining contemporaneous records of pricing policies, economic analyses, and benchmarking studies to demonstrate arm's length pricing.

Companies should also consider Kenya's controlled foreign company (CFC) rules, which may attribute income from foreign subsidiaries to Kenyan resident companies under certain circumstances. Proper structuring and planning can help manage these obligations while remaining compliant with local regulations.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to Kenya efficient and simple. It's the one account for managing your money globally.

With a Wise Business account*, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.

• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.

• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.

• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from paying your first registration fee to receiving international payments and managing your global treasury.

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*Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QuickPay QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

FAQs - Corporate tax in Kenya

Who is liable for corporate tax in Kenya?

All companies incorporated in Kenya are liable for corporate tax on their worldwide income. Non-resident companies are taxed only on income sourced from Kenya. This includes companies with their place of effective management in Kenya, even if incorporated elsewhere.

Are there any tax incentives for businesses in Kenya?

Yes, Kenya offers several tax incentives. Manufacturing companies can access a 15% corporate tax rate under certain conditions. EPZ companies enjoy a 10-year tax holiday followed by a 25% rate. SEZ companies benefit from 10% tax for the first 10 years, then 15% for the next 10 years. Additionally, there are incentives for investments in affordable housing, agriculture, and renewable energy.

What is the tax treatment of dividends in Kenya?

Dividends paid by Kenyan companies to residents are subject to 5% withholding tax. For non-residents, the rate is 10%, though this may be reduced under applicable double taxation agreements. Dividends received by Kenyan companies from other Kenyan companies are generally exempt from tax.

What is the process for registering for corporate tax in Kenya?

Companies must register for corporate tax through the KRA's iTax portal within 30 days of incorporation or commencement of business. The process requires submission of incorporation documents, memorandum and articles of association, and details of directors and shareholders. A Tax Identification Number (TIN) is issued upon successful registration.

What are the common pitfalls to avoid regarding corporate tax in Kenya?

Common mistakes include failing to register for tax within the required timeframe, not making quarterly instalment payments, inadequate transfer pricing documentation, and misunderstanding the source rules for non-resident taxation. Companies should also ensure proper classification of expenses and maintain detailed records to support tax positions during audits.

Sources used in this article:

1. PwC Tax Summaries: Kenya Taxes on Corporate Income
2. International Bar Association (IBA): Kenya Tax Framework and International Mobility
3. Kenya Revenue Authority (KRA): iTax Portal
4. PwC Tax Summaries: Kenya Tax Administration
5. Spondoo: Corporation Tax Filing Deadline in Kenya (Key Dates and Penalties)
6. DHL: How to Keep Your Kenyan Business Compliant for Q4
7. Officephase: Checklist to Stay Compliant When Doing Business in Kenya (2025)
8. Kenya High Commission UK: Why Invest in Kenya
9. U.S. Department of State: 2024 Investment Climate Statements - Kenya
10. Kenya Investment Authority (KenInvest): Business Climate
11. Multiplier: Kenya Company Registration
12. Kenya High Commission Canada: Why Invest in Kenya
13. KenInvest eProcedures: Company Registration Procedure
14. Business Registration Service (BRS): Registered Entities Information

Sources last checked 24/10/2025