Registering a Branch of a Foreign Company

According to the Companies Act No. 17 of 2015, a "foreign company" refers to a company incorporated outside Kenya.

Registering a foreign company branch in Kenya requires adherence to specific steps and regulations. The branch must comply with rules regarding the company's name and appoint a local representative to accept legal notices.

Additionally, the registration process typically includes submitting various documents such as :

• Company name search and reservation.
• Company's memorandum and articles of association or Constitution.
• Details of directors and shareholders.
• Registered office address details.

Some of the key legislations that foreign companies need to consider when setting up a branch in Kenya include;

• The Companies Act  (No. 17 of 2015) : According to Kenyan law, a foreign company must register its branch with the company registrar within 30 days of establishing a business presence in the country.
• The Income Tax Act: Foreign companies must comply with Kenyan tax regulations by registering with the Kenya Revenue Authority (KRA) and fulfilling their tax obligations as per the Income Tax Act.
• The Kenya Citizenship and Immigration Act, 2011 : Foreign companies looking to employ expatriates in their Kenyan branches must adhere to immigration regulations set out in the Immigration Act. This involves obtaining work permits for foreign employees working in Kenya.

1. Name Search and Reservation : Start by conducting a name search to ensure that the proposed branch name isn't similar to any existing local company in Kenya. If desired, the foreign company can use an alternative name different from its registered name in the country of origin for conducting business in Kenya. This alternative name doesn't affect the company's rights or obligations.

2. Company's Incorporation Documents : The application must include the company's incorporation documents from its country of origin. These documents include:

• A certified copy of the current certificate of the foreign company's incorporation or registration in its place of origin, or a similar document.
• A certified copy of its constitution or memorandum and articles of association.
• A list of its directors and shareholders or secretary, including their personal details.
• If the list includes directors residing in Kenya and serving on a local board of directors, a memorandum executed by or on behalf of the foreign company stating the powers of those directors.

3. Registered Office Address : The branch office needs a physical office in Kenya and its main business location in its home country to meet legal and business transaction requirements. This setup ensures the entity has an official address and can comply with local laws while gaining trust in the regional market.

4. Local Representative : Appoint a local representative for the branch. The local representative is responsible for all matters related to the branch’s operations in Kenya. According to The Companies Act No. 17 of 2015, a local representative of a registered foreign company is;

• Responsible for performing all acts, matters, and things that the company is required to do under the Act. 
• The representative is personally liable for any penalty imposed on the company for a contravention of, or failure to comply with the Act, if the Court hearing the matter determines that the local representative should bear such liability.

If a registered foreign company has two or more local representatives, those representatives are jointly and severally;

• Responsible for performing all acts and tasks that the company is required to do by or under the Act; and
•  Personally liable to a penalty imposed on the company for a contravention of, or failure to comply with, the Act if the Court hearing the matter determines they should bear such liability.

5. Application documents :  To complete the registration, submit the signed and scanned FC2, FC4, and FC6 forms along with the Certificate of Incorporation, Constitution, notarized Memorandum and Articles of Association, and Acceptance Letter from the Local Representative to the Companies Registry for review and approval.

After registering and receiving the Certificate of Compliance, the foreign branch must register with the Kenya Revenue Authority (KRA) to obtain a Tax Personal Identification Number (PIN).

In Kenya, a branch is treated as a non-resident/foreign company with a permanent establishment. Income generated within Kenya by the branch is subject to taxation.

Direct taxes are levied on the income of the foreign company, including income taxes such as;

• Corporation Tax
• Digital Service Tax
• Pay As You Earn (PAYE)
• Turnover Tax 
• Capital Gains Tax
• Withholding Tax
• Rental Income Tax

Indirect taxes are levied on the consumption and provision of goods or services, such as;

• Value Added Tax (VAT) Foreign companies with taxable supplies or sales turnover of Ksh. 5, 000, 000 or more annually must account for Value Added Tax (VAT). VAT-registered companies must file monthly returns and make payments by the 20th of the following month.
• Excise Duty : If the branch trades in excisable goods or services in Kenya, such as bottled water, soft drinks, or alcohol, it may be subject to Excise Duty.

1. Communication and Documentation : A registered foreign company is required to state its name and other specified information in all and any of its documents and communications relating to its business in Kenya.

2. Tax Compliance :  A registered foreign company must annually pay a corporate tax at a rate of 37.5% on taxable income. Ensure that your branch adheres to Kenyan tax regulations. This includes

• Understanding corporate tax rates, 
• Filing tax returns, and 
• Fulfilling any other tax obligations.

3. Business Licenses and Permits : Depending on your industry and activities, you may need specific licenses or permits. Research and obtain the necessary approvals.

4. Changes to Company Details : The registered foreign company to notify the Registrar within one month of any changes in any of the following information and or documentation relating to the foreign company:

• The change of name of the company.
• The constitution or any other document lodged during registration in relation to the company.
• The directors, shareholders and secretary.
• The powers of any directors who reside in Kenya and members of a Kenyan board of directors of the company.
• The local representative or local representatives.
• The name or address of a local representative.

5. Annual Financial Statement Compliances :  A registered foreign company must annually submit a copy of its financial statement by the end of each calendar year or within fifteen months.

6. Employment Laws : Familiarize yourself with local labor laws. These cover aspects such as employment contracts, working hours, leave policies, and employee rights.

7. Environmental Regulations : If your operations impact the environment, be aware of environmental laws and regulations.

1. Branch: A branch is an extension of the foreign company, lacking a separate legal identity. It shares the same directors, constitutive documents, and policies as the parent company.

2. Subsidiary : A subsidiary has a distinct legal identity and operates independently from the foreign company. It is considered a local/resident company in Kenya. The foreign company incorporates a new company under a different name in Kenya.

• Subsidiary Taxation : A subsidiary is taxed like any local company incorporated in Kenya. The entire business income of a subsidiary is subject to a tax rate of 30%.
• Payments to Holding Company: Payments made by a subsidiary to its parent company are subject to a Withholding Tax (10% on dividends) as they are considered transactions between different legal entities.

3. Joint Venture : Joint ventures involve two or more companies coming together to form a new entity for a specific business purpose. This structure allows companies to share resources, risks, and profits but requires clear agreements to manage expectations and responsibilities.

To register a branch of foreign company in Kenya, follow these steps via the e-Citizen Portal:

1. Create an e-Citizen Account

• If you don't have an account, visit the e-Citizen Portal to sign up.
• Provide the necessary personal contact details to create your account.

2. Log in to Your e-Citizen Account

• Log in using either your registered email address, ID number or passport number and password.

3. Select the Business Registration Service

• After logging in, navigate to the Business Registration Service section.

4. Choose "Register a Foreign Company Branch"

• Find and select the option to register a foreign company branch.

The registration and incorporation fee of KES 7,550 is paid upfront upon completing online registration.

Business Registration Services (BRS)

eCitizen Portal.

Kenya Industrial Property Institute