Before going through the application process for an Investor Permit, it’s important to understand the process of registering a business in Kenya. Registering a business is an important thing to do for many reasons, one of the most important being the protection you receive from any potential accidents or issues.
It’s recommended to consult with local immigration experts or relevant government agencies for the most up-to-date and accurate information on the registration and application processes.
As with all business structures, there are a number of legal structures your business can undertake. Making sure to choose the correct one is important.
While considering the different business structures available to you, there are many factors to consider that will either help or hinder your ability to receive an Business Investment Visa.
The Class G permit is issued to foreigners who wish to engage in business in Kenya and while there is no single “best” choice, there will be a structure that works best for you and your business’s goals.
The most important thing you need is proof of intended investment.
The online business registry has a massive directory of business names registered in Kenya, which makes choosing a unique name for your business that much easier.
After registering on eCitizen, you can search through thousands of names to make sure that the name you intend on registering your business to is available and appropriate.
An Articles of Association (AOA) specifies the rules and regulations within a company such as voting rights, and management responsibilities, and outlines the company’s overall purpose.
The document also lays out how the company plans to accomplish various tasks.
A Memorandum of Association (MOA) is slightly different to an Articles of Association, in that it is a legally binding document that expresses the objectives, mission, and scope of an organisation.
It can also outline the legal status of the company and is a necessary document when registering a business.
Paying the Registration Fees
There is a mandatory fee of KES 10,650 which can be paid either in person or through the eCitizen portal.
Besides putting forward capital to kickstart your business, you are also required to pay registration fees so as to ensure that the business director is going through the proper channels.
The easiest business to start requires little to no initial financial investment, but unfortunately, the Kenyan requirements for investing are set in stone.
Receiving a donation towards your initial investment can be a massive boost and a helpful start to your application process.
In the case of a private company, there may legally not be less than one director. The maximum number of allowed shareholders is 50 and all their information must be registered and kept available if necessary.
A company secretary is responsible for the administration of the company, most importantly surrounding the statutory and regulatory requirements, and ensuring that all decisions made by the board of directors are correctly implemented.
The company secretary’s name is also the legally binding name of the company, and it’s their job to ensure that the company and its directors within the law.
All companies are required to submit relevant annual returns and financial statements and ensure that the annual business registration fee is paid.
All registered foreign companies are required by law to establish and maintain a registered office within Kenya. This office will receive all communications and notices. Any change to the registered office should be made known to the Registrar within a period of seven days.
Businesses need to be registered for tax and will need a Tax Identification Number (TIN), sometimes called a Kenyan Revenue Authority PIN.
You can register your business for a TIN online via iTax, where you will be required to submit various forms that require sensitive information on all company directors, such as their PIN numbers and IDs.
Obtaining Business Licenses and Visa
Obtaining a business visa (permit) is a legal requirement for all occupations, and without it, your business cannot legally conduct financial transactions with the government.
If your business requires specific licences or visas relevant to your sector, it is your obligation to apply for and collect them before beginning operations.
Register for Value Added Tax (VAT)
There is an annual VAT registration threshold for Kenyan businesses of KES 5 million. If your business is below the threshold, you are liable to a 3% turnover tax up to the registration threshold level.
If you are a non-resident trader and cross the threshold, you are required to apply for a VAT number and appoint a local VAT agent, who then becomes viable for the VAT due.
PAYE is a method of collecting individual taxes, applying to both residents and non-residents. It also refers to all gains or profits received in connection with the business.
Anyone who makes payments to an employee(s) is required to be registered for PAYE, whereupon one is required to deduct tax from the employee(s) and remit the tax deducted to the KRA.
PAYE is chargeable to persons of employment income of KES 24,000 and above per month.
Obtain Business Visa and Licenses
Business Investment Visas are required to do business in Kenya, and while the standard BR-1 form is necessary for all business dealings, there are also specific permits and licences relevant to specific sectors.
For example, if you require drivers for agricultural purposes, you will need to make sure your employees have relevant driving licences.
KenInvest, the leading investment promotional body in Kenya, aims to assist investors in obtaining relevant licences or visas in order to do business within Kenya. They make sure to liaise with the relevant governmental authority to do so.
It is important that your business registers with the National Social Security Fund (NSSF), and even more so that all employees do so as well. The NSSF provides employment security to all workers in Kenya and handles funds and repayments as well.
Social security is a legal requirement and a necessity for informal workers, as part of Kenya’s contribution towards reaching the Sustainable Development Goals (SDGs).
Register for National Health Insurance Fund (NHIF)
It is incredibly beneficial to offer health care as a business, not just to employees but to the business as well. Employee health insurance has proven to increase productivity and boost internal morale.
You can register online for NHIF by using the Selfcare platform, or by downloading the ‘My NHIF‘ App.
Register for Work Injury Benefits Act (WIBA)
The Work Injury Benefits Act (WIBA) is a protection act against employees suffering an injury at the workplace and being placed in a position where they find themselves unable to work and earn.
For the first three months an employee is booked off from work, they are required to receive 75% of their earnings/wages as at the time of the accident, assuming the injury lasts for the full three months. The company can then claim it back from the Compensation Fund.
Opening a separate, dedicated business bank account is incredibly important for a number of reasons, the most important of all being that you as an individual are subsequently protected along with your assets.
Having a business bank account also improves the overall company’s image and ensures that the government is kept satisfied with regard to tax compliance.
Having a separate business bank account also allows for an easier accounting process and more accurate financial reporting. Bookkeeping is incredibly important for a company’s financial well-being.
Making good use of both internal financial teams and external auditors will ensure that your numbers are well taken care of.
As annual trends change and common practices come and go, keeping track of and submitting annual reports become more and more important as the years go by.
Not only do you keep the government happy with regular updates, but you ensure a surefire way of tracking your company’s trends and information updates.
When following the application process for an investor visa, meeting the business registration requirements can be a bit daunting. Thankfully, the Kenyan Immigration System has been streamlined to make the process as simple and efficient as possible.
Always make sure to consult immigration experts and seek advice from those in your relevant sector. Brush up on your sector-specific regulations, and keep informed about any legal updates within Kenya.
Written by Simon Carletti, PR and Creative Supervisor