Doing Business in Kenya as a Foreigner: Legal Requirements, Costs & Structures

Kenya is East Africa's largest economy and a gateway to a market of over 300 million consumers. This guide explains what foreign investors need to know before entering the Kenyan market.

Why Kenya: Market Overview

Kenya offers compelling advantages for foreign investors:

Regional hub: Nairobi is the commercial capital of East Africa, hosting regional headquarters for multinational corporations
Growing middle class: Expanding consumer market with increasing purchasing power
Infrastructure: Modern port facilities, international airports, and improving road networks
Technology ecosystem: Leading African tech hub with high mobile penetration and innovation
English-speaking: Business language is English, reducing communication barriers
Legal framework: Common law system familiar to investors from UK, US, and Commonwealth countries

Key Economic Sectors

Foreign investment is particularly active in:

Technology and fintech: Mobile money, digital platforms, software development
Agriculture: Food processing, horticulture, value-added products
Renewable energy: Solar, wind, and geothermal projects
Manufacturing: Consumer goods, construction materials, assembly
Financial services: Banking, insurance, investment services
Tourism and hospitality: Hotels, eco-tourism, MICE facilities
Healthcare: Private hospitals, pharmaceutical distribution
Education: Private schools, vocational training, edtech

Legal Structures Available to Foreigners

1. Private Limited Company

The most common structure. Key characteristics:

Separate legal personality
Limited liability protection
100% foreign ownership allowed (in most sectors)
Minimum one director and one shareholder
Annual compliance requirements

2. Branch of Foreign Company

For companies wanting to extend existing operations:

No separate legal entity created
Parent company fully liable
Easier to close down
Must file parent company accounts annually

3. Limited Liability Partnership (LLP)

Suitable for professional services:

Partnership flexibility with limited liability
Tax transparency (partners taxed individually)
Less common for foreign investors

4. Representative Office

For market research only:

Cannot engage in commercial activities
No revenue generation in Kenya
Lower compliance burden

Capital Requirements and Investment Thresholds

General Investment

There is no general minimum capital requirement for foreign investment in most sectors. However, practical considerations apply:

Bank opening requirements often expect KES 100,000 - 500,000
Work permit applications may require evidence of capital commitment
Specific regulated sectors have minimum capital requirements

Class G Investor Permit

For foreign investors seeking residency, the Class G permit requires:

Minimum capital investment of $100,000 USD
Intent to invest in Kenya
Proof of funds and source of investment

Regulated Sectors

Specific sectors have additional requirements:

Banking: Substantial capital requirements and Central Bank approval
Insurance: IRA licensing and capital adequacy requirements
Telecommunications: CAK licensing and spectrum fees
Healthcare: MOH facility licensing
Education: MOE registration

Employment Law Basics for Foreign Employers

Key points covered in detail in our Employment Law guide:

Employment Act 2007 compliance mandatory
Written contracts required for employment over 3 months
Statutory deductions: PAYE, NSSF, SHIF, Housing Levy
21 days annual leave minimum
90 days maternity leave
Termination requires proper notice and process

Tax Obligations at a Glance

Corporate Tax

Standard rate: 30% for resident companies
Branch rate: 37.5% for non-resident companies
Turnover tax: 3% for businesses below KES 25 million annual turnover

VAT (Value Added Tax)

Standard rate: 16%
Registration threshold: KES 5 million annual turnover
Monthly returns due by 20th

Withholding Tax

Dividends: 5% (resident) / 15% (non-resident)
Interest: 15% (resident) / 15% (non-resident)
Royalties: 5% (resident) / 20% (non-resident)
Management/professional fees: 5% (resident) / 20% (non-resident)

Total Cost of Entry: Realistic Budget

Here is what foreign investors should budget for initial entry:

Item	Cost Range (USD)	Notes
Company registration	$100 - $300	Government fees only
Legal/professional fees	$500 - $2,000	Optional but recommended
KRA PIN (foreign directors)	$0 - $200	Agent assistance if needed
Bank account opening	$50 - $500	Varies by bank
First year accounting	$500 - $2,000	Monthly compliance
Office/virtual address	$300 - $6,000	Depends on requirements
Work permits	$2,000 - $5,000	If relocating staff
Total Initial Setup	$3,450 - $16,000	Depending on complexity

Paths to Operating Without Full Incorporation

Not ready for full incorporation? Consider these alternatives:

Employer of Record (EOR)

Hire staff in Kenya without creating an entity. The EOR becomes the legal employer while you manage the work. Ideal for 1-10 employees or market testing.

Cost: ~$199/employee/month

Local Partner or Agent

Partner with a Kenyan company that handles local operations. Ensure proper contractual protection.

Nominee Director Service

Appoint a local director to satisfy practical requirements while maintaining control.

Cost: From $99/month

What Professional Support You Need

Successful market entry typically requires:

Corporate lawyer: Company registration, contracts, compliance
Tax advisor: KRA registration, tax planning, filings
Accounting firm: Monthly bookkeeping, payroll, annual returns
Immigration consultant: Work permits if relocating staff

How BaseKenya Can Help

BaseKenya provides integrated support for foreign investors entering Kenya:

Company registration guidance and support
Nominee director services
Employer of Record for quick hiring
Accounting and tax compliance
Legal support through qualified Kenyan advocates
Escrow services for secure transactions

Book a free consultation to discuss your Kenya market entry strategy and receive a written cost summary.