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Kenya officially the Republic of Kenya, is a country in Africa and a founding member of the East African Community (EAC). Its capital and largest city is Nairobi. Kenya’s territory lies on the equator and overlies the East African Rift covering a diverse and expansive terrain that extends roughly from Lake Victoria to Lake Turkana (formerly called Lake Rudolf) and further south-east to the Indian Ocean. It is bordered by Tanzania to the south and southwest, Uganda to the west, South Sudan to the north-west, Ethiopia to the north and Somalia to the north-east.
Kenya covers 581,309 km2 (224,445 sq mi), and had a population of approximately 48 million people in January 2017.
Kenya has a warm and humid tropical climate on its Indian Ocean coastline. The climate is cooler in the savannah grasslands around the capital city, Nairobi, and especially closer to Mount Kenya, which has snow permanently on its peaks.
Further inland are highlands in Central and Rift Valley regions where tea and coffee are grown as cash crops which are major foreign revenue earners. In the West are Nyanza and Western regions, there is an equatorial, hot and dry climate which becomes humid around Lake Victoria, the largest tropical fresh-water lake in the world. This gives way to temperate and forested hilly areas in the neighbouring western region.
The north-eastern regions along the border with Somalia and Ethiopia are arid and semi- arid areas with near-desert landscapes.
Kenya is known for its world class athletes in track and field and rugby. Thanks to its diverse climate and geography, expansive wildlife reserves and national parks such as the East and West Tsavo National Park, Amboseli National Park, Maasai Mara, Lake Nakuru National Park, Aberdares National Park and white sand beaches at the Coastal region, Kenya is home to the modern safari and has several world heritage sites such as Lamu and numerous beaches, including in Diani, Bamburi and Kilifi, where international yachting competitions are held every year.
The capital, Nairobi, is a regional commercial hub. The economy of Kenya is the largest by GDP in East and Central Africa. Agriculture is a major employer; the country traditionally exports tea and coffee and has more recently begun to export fresh flowers to Europe.
The service industryis also a major economic driver. Additionally, Kenya is a member of the East African Community trading bloc. Kenya is now divided into 47 semi-autonomous counties, governed by elected governors.
Foreign investment in Kenya
The country has the region’s best performing currency and constitutes 40 per cent of the East Africa Community’s gross domestic product. It has a strong development potential due to a emerging inclination towards urbanization and a rising middle class which has a yearning for high value goods and services.
Investment opportunities exist in different sectors including agriculture, mining, real estate, manufacturing, agro processing, infrastructure tourism and ICT.
The following are some of the reasons Kenya continues to be an investment hub for many international companies.
Kenya provides potential investors with a diverse potential market due to its membership in regional and world trading bodies such as EAC, COMESA, AU, and WTO.
The country is also a signatory to protections agreements such as the Africa Growth and Opportunities Act (AGOA), ACP Cotonou agreement and Multilateral Trade System (MTS). All these give exports from Kenya privileged access, duty reduction and freedom from quota restrictions in related world markets.
Located on the East African coast, Kenya’s geographical location is strategic for investors who wish to access the East and Central African market which has a population of over 385 million consumers.
The Kenya – Uganda railway as well as the port of Mombasa, which is the largest deep water port in the region providing shipping requirements to over a dozen countries, form a gateway into the region while the Jomo Kenyatta International Airport provides international connectivity to Asia, Europe and other parts of Africa.
Kenya has instituted remarkable reforms geared towards significantly lowering the cost of starting up and running businesses in the country. The reforms intend to simplify, make transparent and minimize the number of licensing requirements in addition to centering on legitimate regulatory functions.
Investment acts and work force
The foreign investment act in the Kenyan constitution guarantees protection of life and private property as well as confiscation of private property by the government. The country is also a member and signatory to International Centre for Settlement of Investment which solves conflicts between host countries and foreign investors.
Kenya revels in a large number of highly educated, qualified and skilled multilingual work force. It comprises mostly of locally trained professionals with a small percentage having been trained in other institutions around the world.
About 55 % of the Kenyan population falls between the age of 15-60 years meaning that most of them are fit to provide labour in diverse sectors of the economy.
Main sectors in Kenya
The private sector in Kenya is very significant and has been termed as one of the most resilient ones in the world. It has a significant number of foreign investors in different aspects of the economy.
The sector has three main organizations mandated with voicing its concerns namely; The Kenya Association of Manufacturers (KAM), the Kenya Private Sector Alliance (KEPSA) and Federation of Kenya Employers (FKE). In addition, regular round table dialogues between the stakeholders in the sector and the government are held in a bid to address the challenges being faced by the investors.
Kenya forms part of the Northern corridor infrastructure and has embarked on building a high speed railway line from the port of Mombasa to Nairobi then to Uganda and finally to Rwanda. Furthermore, a new port is under construction in Lamu as well as a railway line linking it to Ethiopia and South Sudan. The country also boasts of a vast road network which is presently undergoing an overhaul aimed at adding 10,000 km of tarmacked roads by the year 2017. All this will position the country as a transport hub and open up new avenues and regions for investment.
Despite changes in its political system due to its multiparty democracy, Kenya has continued to have repressive stability. The new constitution promulgated in 2010 has gone a long way in enhancing political stability by providing for separation of powers in different arm of the government.
Such stability has allowed for remarkable standards of living and development of high quality social amenities including schools, hospitals, restaurants and leisure spots making the country boast of a high number of expatriates living and working in it.
TAXATION Direct Taxes
Income Tax Department administers various direct taxes, which have different rates:
a) Pay As You Earn (PAYE)
PAYE is a method of collecting tax at source from individuals in gainful employment. The employer
deducts a certain amount of tax from his / her employee’s salary or wages on each payday then remit the tax to the Authority. This relieves the employee from paying taxes at the end of the year and shifts the responsibility to the employers.
Every individual who receives income is granted a tax credit or a tax relief from the Authority, this is known as Personal Relief. Insurance relief and mortgage relief are also available for eligible persons.
The total tax credit is spread evenly during the charge year. At the end of the year, an individual will submit his self-assessment on total income received from various sources. Should the tax credit be lower than actual tax charged during the year, the balance of tax due will be payable.
b) Corporation Tax
Corporation tax is a form of income tax that is levied on companies. Resident companies are taxable at a rate of 30% w.e.f year of income 2000 while non – resident companies are taxable at a rate of 37.5%.w.e.f year of income 2000.
c) Withholding Tax
Withholding taxes are deducted at source from the following sources of income: interest, dividends, royalties, management or professional fees, commissions, pension or retirement annuity, rent, appearance or performance fees for entertaining, sporting or diverting an audience.
Advance Tax
Advance tax is applicable to Matatus and other Public Service Vehicles. It is not a final tax, but a tax partly paid in advance before a public service vehicle or a commercial vehicle is registered or licensed. The current rates are:
- For vans, pickups, trucks and lorries Kshs.1, 500 per ton of load capacity per year or Kshs.2, 400 whichever is higher.
- For saloons, station wagons, mini-buses, buses and coaches, Kshs.60 per passenger capacity per month or Kshs.2, 400 whichever is higher.
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