Direct taxes
The Income Tax Act constitutes the principal legislation.
Corporate income tax
Corporate income tax (CIT) is defined at the national level (no county or provincial taxes on income). The corporate tax year is based on the calendar year (Gregorian calendar).
Kenya Revenue Authority has set-up a department dedicated to large taxpayers (the Large Taxpayer Office).
The following table presents CIT rates according to the entity status.
Type of rate | Entity | CIT rate (%) | Comments |
---|---|---|---|
General rate | Resident company | 30 | Includes subsidiary of foreign parent companies |
Branch of foreign companies and permanent establishments | 37.5 | Only profits attributable to the Kenyan permanent establishment are taken into account | |
Special rate | Newly publicly listed company ≥ 40% of shares are listed | 20 | The special rate applies only for the first five years after listing |
Newly publicly listed company ≥ 30% of shares are listed | 25 | The special rate applies only for the first five years after listing | |
Newly publicly listed company ≥ 20% of shares are listed | 27 | The special rate applies only for the first three years after listing | |
Company listed on securities exchange | 25 | The special rate applies only for the first five years | |
Local motor vehicle assembly company | 15 | The special rate applies for the first five years. Subject to conditions, it is possible to extent the special rate to an another five-year period | |
Special rate for economic zones | Export processing zone enterprise | 0 25 |
0%: first ten years 25%: succeeding ten years |
Special economic zone enterprise, developer, and operator | 10 15 |
10%: first ten years 15%: succeeding ten years |
Note: last update: 2018.
Sources: Kenya Revenue Authority, PricewaterhouseCoopers.
Corporate withholding taxes
General taxation
Type of payment | Resident rate (%) | Non-resident rate (%) |
---|---|---|
Dividends | 0 if >12.5% voting power
5 otherwise |
0 if paid by SEZ enterprises, developers or operators to any nonresident
10 otherwise |
Interest on government beared bonds with two years and above maturity | 15 | 15 |
Interest on government bearer bonds with ten year and above maturity | 10 | N/A |
Interest on other bearer instruments | 25 | 25 |
Management, technical or professional fees | 5 | 20
5 if paid by a SEZ enterprise |
Royalties | 5 | 20
5 if paid by a SEZ enterprise |
Note: last update: 2018.
Sources: Kenya Revenue Authority, PricewaterhouseCoopers, IGuide Kenya.
Oil and gas sector
The oil and gas sector is subject to specific withholding rates. Payments to non-residents in the oil and gas sector are subject to the following rates
Type of payment | Witholding rate (%) |
---|---|
Dividend | 10 |
Interest | 15 |
Management or professional fees | 12.5 |
Natural resource income | 20 |
Sale of property or shares in oil, mining, or mineral prospecting companies | 10 if resident 20 if non-resident |
Note: last update: 2018.
Sources: Kenya Revenue Authority, PricewaterhouseCoopers.
Indirect taxes
Value added tax
Value added tax is a tax on consumption. Compared to a sales tax, VAT is fiscally neutral for businesses. Therefore, VAT is not a direct final cost for companies.
Legislation
The principal legislation is contained in the VAT Act (2013). The Value Added Tax Regulations (2017) provides guidelines as regards as the implementation of the legislation.
VAT rate
The normal VAT rate is set at 16% (2017 Finance Act).
In order to foster local production (manufacturing activities and agriculture), a number of inputs (including raw materials) and capital goods benefit from a zero VAT rate. Furthermore, the supply of locally assembled tourist vehicles is now VAT-exempted.
Customs duties
General customs tariffs
As a member of the East African Community (EAC) customs union, Kenya applies the EAC Common External Tariff (2017).
Summary of the EAC customs tariff
Type of goods | Tariff (%) |
---|---|
Raw materials | 0 |
Capital goods | 0 |
Intermediate goods | 10 |
Finished goods | 25 |
Note: last update: July 2018.
Sources: Kenya Revenue Authority, PricewaterhouseCoopers, IGuide Kenya.
Preferential tariffs
To discover preferential tariffs, click here.
Excise taxes
The consumption of some commodities and services is subject to an excise tax. Excisable goods include items such as beverages (bottled water, soft drinks, alcohol), tobacco, petroleum products, motor vehicles, cosmetics, jewellery. Excisable services include cell phone airtime, fees charged for money transfer services, and other fees charged by financial institutions.
Double taxation treaties
Kenya has tax treaties with a number of countries. Double taxation agreements usually specify reduced rates for non-residents. The tax treaty with China is not yet in force.
Tax treaties with the following countries are currently in force
Note: last update: July 2018.
Sources: Kenya Revenue Authority, Deloitte.
Tax treaties with the following countries were signed but not yet in force
Burundi | China | Italy | Kuwait |
Mauritius | Netherlands | Rwanda | Seychelles |
Singapore | Tanzania | Thailand | Uganda |
Note: last update: July 2018.
Sources: Kenya Revenue Authority, Deloitte.