Kenya Taxes for Foreign Investors (2025)

Corporate Income Tax (CIT)

• Resident Companies: Taxed at a 30% rate.
• Non-Resident Companies (with permanent establishment in Kenya): Taxed at a 37.5% rate on income accrued in or derived from Kenya.
• Branch of a Foreign Company: Treated as a non-resident; taxed at 37.5%.
• Capital Allowances: Deductible as per the Second Schedule to the Income Tax Act.

Value Added Tax (VAT)

• Standard Rate: 16%
• Zero-Rated Supplies: Includes exports, supplies to SEZs, and some goods/services (e.g., some agricultural inputs).
• Exempt Supplies: Includes financial services, educational services, and certain medical supplies.
• VAT Registration Threshold: Annual taxable turnover of KES 5 million and above.

Withholding Tax (WHT)

Personal Income Tax (for Foreign Individuals)

• Progressive Rates from 10% to 30%.
• Applies to employment income earned in Kenya.
• Non-residents are taxed only on income derived from Kenya.

Capital Gains Tax (CGT)

• Applicable to the transfer of property (e.g., land, shares).
• Rate: 15% (as of 2023; unchanged in 2025).
• CGT is final and not subject to further taxation.

Turnover Tax (TOT)

• Applies to resident businesses with annual turnover between KES 1 million and KES 25 million.
• Rate: 1% on gross turnover.
• Foreign companies are not eligible for TOT.

Minimum Tax

• Suspended as per court ruling in 2021; not in force as of 2025.

Excise Duty

• Levied on specified goods and services including alcoholic beverages, tobacco, motor vehicles, financial services, and airtime.
• Rates are prescribed in the Excise Duty Act and are subject to annual inflationary adjustments.

Digital Service Tax (DST)

• Applicable to non-resident persons offering digital services to users in Kenya.
• Rate: 1.5% on gross transaction value.
• DST applies where there is no permanent establishment in Kenya.
• Exempt where a non-resident is registered for income tax in Kenya.

Payroll Taxes and Statutory Deductions

• Employers are required to deduct and remit:
  • PAYE (Pay As You Earn): From 10% to 30% based on income brackets.
  • NSSF: Mandatory pension contribution (as per NSSF Act, 2013).
  • NHIF: Health insurance contribution, monthly rate based on salary.

Tax Incentives for Foreign Investors

• Special Economic Zones (SEZs):
  • CIT at 10% for the first 10 years, 15% for the next 10 years.
  • Zero-rated VAT on local purchases and imports.
  • Export Processing Zones (EPZs):
    • 10-year CIT holiday, then 25% for 10 years.
    • Exemption from import duty and VAT on inputs.
    • Investment Deduction: Up to 100% for qualifying capital expenditure outside Nairobi and Mombasa.

Double Taxation Agreements (DTAs)

• United Kingdom
• Canada
• India
• South Africa
• United Arab Emirates
• France
• Germany
• Mauritius