Doing Business in Kenya - RSM International

Where a business is carried on or exercised partly within and partly outside Kenyaby a resident person, the whole of the gains or profits from that business shall bedeemed to have accrued in or to have been derived from Kenya.Dividends received from sources outside Kenya are not chargeable to tax in Kenya.The tax rates differ between resident and non-resident companies as outlined in thetable below.% rateResident company 30%Unincorporated entity with a turnover of up to Shs 5 million - on gross receipts 3%Non-resident company operating as a branch under Certificate of Compliance 37.5%Export Processing Zone enterprises• First 10 years Nil• Next 10 years 25%Newly listed companies following year of listing• List at least 20% of its shares 27% for 3 yrs• List at least 30% of its shares 25% for 5 yrs• List at least 40% of its shares 20% for 5 yrsReal Estate Investment TrustsExemptBranches of non-resident companies are taxable on all their incomes derived fromor accrued in Kenya. In determining the profits of a permanent establishment inKenya, the gains or profits shall be ascertained without any deduction in respect ofinterest, royalties or management or professional fees paid or purported to be paidby the permanent establishment to the non-resident person, and by disregarding anyforeign exchange loss or gain with respect to the net assets or liabilities purportedlyestablished between the permanent establishment in Kenya and the foreign headoffice or other offices of a non-resident person.A permanent establishment is defined under the Income Tax Act as a fixed place ofbusiness in which that person carries on business and includes a building site and aconstruction/assembly project, which has existed for 6 months or more.Unless a specific approval is obtained from the Minister of Finance to carry forwardtax losses for a longer period, such losses can only be carried forward to a maximumof 4 succeeding years.24DOING BUSINESS IN KENYA