Foreign company registration in Kenya starts with one decision: a Kenyan subsidiary, a branch of the foreign company, or a limited liability partnership. The registration fees are close, but the legal and tax consequences are not, and a branch can carry a heavier tax cost than a subsidiary. This guide explains the three routes, how to register a branch, the tax difference, and the restrictions that catch foreign investors out.
This guide is for foreign companies and foreign investors setting up in Kenya, and for their advisers. If you are a foreign individual coming to run the business yourself, read this alongside our guides to the Class G business permit and the Class D employment permit. For the mechanics common to every entity, see our guide to company registration in Kenya.
A foreign business can establish itself in Kenya in three ways, and no Kenyan partner or nominee shareholder is required to do so. The choice is rarely about the registration fee, because the fees are close. It is about legal personality, liability and tax, and it is expensive to change after the fact.
A subsidiary is a Kenyan company owned by the foreign parent. It is a separate legal person, so it contains Kenyan risk inside the Kenyan entity and is taxed as a resident. A branch is not a separate legal person; it is the foreign company itself registered to operate in Kenya, so obligations it incurs here reach the parent directly, and it is taxed as a non-resident. A limited liability partnership suits some professional and joint-venture structures. Most inbound investors choose a subsidiary.
| Feature | Subsidiary | Branch | LLP |
|---|---|---|---|
| What it is | A Kenyan company owned by the parent | The foreign company registered to operate in Kenya | A partnership with limited liability |
| Separate legal person? | Yes | No, it is the parent | Yes |
| Kenyan liability reaches the parent? | No, contained in the subsidiary | Yes | No |
| Taxed as | Resident, 30 per cent | Non-resident PE: 30 per cent, plus 15 per cent on repatriated profits | Partners taxed on their share |
| Registration fee | KES 10,650 | KES 7,550 | KES 25,000 |
| Local representative required? | No (but needs Kenyan directors’ details) | Yes | A manager in Kenya |
The tax line is still the one to weigh, even though the headline rates now match. Since 1 January 2024 a branch and a resident subsidiary both pay 30 per cent corporation tax. A branch, however, also pays a 15 per cent tax on the profits it repatriates to its parent, so the total tax on money taken out of Kenya can exceed a subsidiary’s. The usual reasons to choose a branch anyway are that the parent wants to keep the Kenyan operation on its own balance sheet, or that a contract or licence requires the foreign entity itself to contract in Kenya.
A branch is registered under the Companies Act, 2015. Any foreign company that carries on business in Kenya must register, and not registering is an offence that carries a substantial fine, so this is not a step to defer. In broad terms the registration requires:
Once registered, the branch receives a certificate and must keep its filings current, including notifying the registry of changes to the company or its local representative.
Tax is where the subsidiary-versus-branch choice bites. Since 1 January 2024 a branch, which is a permanent establishment of a non-resident, and a resident subsidiary both pay corporation tax at 30 per cent, so the old rate gap has closed. A branch, though, also pays a 15 per cent tax on the profits it repatriates to its parent, which a subsidiary does not. Both must obtain a KRA PIN, register for the taxes that apply to their activity such as VAT and PAYE, and observe Kenya’s transfer-pricing rules on dealings with related parties abroad, which the Revenue Authority scrutinises closely for both structures. Confirm the current rates and any levies with advice before you model the numbers, because tax rates change with each Finance Act.
Beyond tax, a foreign-owned entity faces the same layer of obligations as any Kenyan company: beneficial-ownership filing, statutory registrations once it hires, a county business permit, and any sector licence its activity needs.
Two limits matter in practice, and neither is obvious from the registration forms. First, several regulated sectors make a minimum level of Kenyan shareholding a condition of the licence rather than of incorporation. Telecommunications and ICT, insurance, mining and shipping are the common examples, so you can incorporate a wholly foreign-owned company and then find you cannot be licensed to operate in that sector. Second, under the Constitution a non-citizen cannot hold freehold land in Kenya and is limited to leasehold of up to 99 years, which shapes how a foreign business secures premises.
Registering a company, a branch or an LLP does not give any foreign national the right to live or work in Kenya. A foreign owner running the business needs a Class G permit, and a foreign employee needs a Class D permit, and these routinely take longer than the registration itself. Plan the immigration workstream at the same time as the entity, not after it. See our guide to work permit classes in Kenya.
Our corporate and business-registration team advises foreign investors on the subsidiary-versus-branch decision, registers the entity or the branch, and handles the tax, beneficial-ownership and licensing steps that follow, together with the work permits for the people who will run it. To discuss setting up in Kenya, contact John Maina, Partner, at OLM Law Advocates LLP.
This article is a general guide only and is not legal advice. Please seek advice on your specific circumstances.
OLM Law Advocates LLP advises employers, investors and individuals on Kenyan work and residence permits from start to finish.
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