Tax & International Structuring in Kenya

Essentials guide · Source-checked research43% of statements checked against a source12 checked against an official source14 checked against a secondary sourceChecked 2026-10-1911 held back until checked against an official source10 topics include AI-written statements, not source-checkedNot yet professionally reviewed

• The standard corporate income tax rate for resident companies is 30% (as at mid-2026).

  Branches and permanent establishments of non-residents are also taxed at 30%. Reduced rates apply to export processing zone enterprises (0% for ten years, then 25% for ten years), special economic zone enterprises, developers and operators (10% for ten years, then 15% for ten years) and some other regimes.PwC Worldwide Tax Summaries · checked 2026-10-19

• The standard VAT rate is 16% (as at mid-2026).

  Fuel is taxed at 8%. Zero-rated supplies are taxed at 0% and some supplies are exempt.PwC Worldwide Tax Summaries · checked 2026-10-19

• Withholding tax applies to dividends (15%), interest (15%), royalties (20%) and management or professional fees (20%) paid to non-residents, subject to reduction under a tax treaty.

  Domestic non-resident rates under the Income Tax Act; interest on bearer instruments is taxed at 25% and lower rates apply in the oil and gas sector. Kenya has 15 tax treaties listed in the source, and treaty rates apply only where they are lower.PwC Worldwide Tax Summaries · checked 2026-10-19

• All persons carrying on business, including those not registered for VAT, must issue electronic tax invoices through the Kenya Revenue Authority's eTIMS system, and from 1 January 2024 business expenses not supported by an eTIMS-generated invoice are not deductible for income tax.

  Section 23A of the Tax Procedures Act 2015, introduced by the Finance Act 2023. Some costs are outside the invoice requirement, including employment income, imports, investment allowances, interest and air passenger tickets.Kenya Revenue Authority · checked 2026-10-19

• Kenya has transfer pricing rules that require related-party transactions to be priced at arm's length and supported by documentation.

  Documentation must be submitted to the Kenya Revenue Authority on request. Country-by-country reporting and master and local file rules apply to groups with turnover above KES 95 billion, and advance pricing agreements are available from 1 January 2026.PwC Worldwide Tax Summaries · checked 2026-10-19

• An affordable housing levy of 1.5% of gross monthly salary is deducted from the employee, with a matching 1.5% payable by the employer.

  Gross salary includes basic salary and regular cash allowances but not irregular payments such as bonuses and severance. The levy is remitted within nine working days after the end of the month, with a 3% penalty for each month it is late.PwC Worldwide Tax Summaries · checked 2026-10-19

• Export processing zone enterprises pay corporate income tax at 0% for the first ten years and 25% for the next ten, and special economic zone enterprises, developers and operators pay 10% for the first ten years and 15% for the next ten.

  Supplies of goods or taxable services to special economic zone enterprises are zero-rated for VAT (PwC, Kenya - Corporate - Other taxes). Conditions apply.PwC Worldwide Tax Summaries · checked 2026-10-19

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