Doing business or starting a business in Kenya is a rewarding venture, aside being a country with one of the highest purchasing power in East Africa, Kenya ranks high as one of the best in the region in terms of digital penetration and east of doing business.  Depending on the type of business you intend to register in Kenya, staying compliant with local laws is essential for sustainable growth and avoiding penalties. Whether you’re a startup, SME, or foreign investor, here’s a quick guide on key statutory obligations, deadlines, and penalties you should avoid to maintain compliance in Kenya.

1. Register with KRA to Fulfil Tax Obligations

All businesses must register with the Kenya Revenue Authority (KRA) and obtain a company PIN. Key tax obligations . The usefulness of this is basically for compliance and for identification of your business statutory standing. Like every other jurisdiction, some taxes you may pay include:

• Corporate Income Tax – Due annually. The return must be filed by the 6th month after your company / business the financial year ends.

• VAT Returns – Filed monthly, by the 20th of the following month. ( you are expected to register for VAT tax only if you will be charging VAT or if your turn over annual threshold is 5 million Kenya Shillings or more  there is conversation of 8million threshold within the Finance bills which didn’t pass through the parliament in 2024. Within 30 days of meeting the threshold , you are meant to register. Kenya VAT is 16% which is meant to be added to every goods to be sold . Every VAT registered taxpayer is required to on-board on eTIMS by signing up through https://etims.kra.go.ke and sending service request.

• PAYE – For employers, PAYE returns are due monthly by the 9th.

• Turnover Tax (TOT) – Due monthly for small businesses with under KES 5 million turnover.

Penalty: Depending on the type of the taxes, late filings attract fines of 5% of tax due  or KES 20,000, depending on which is the highest  plus interest on unpaid tax. some category of tax default such as PAYEE 25% of the tax due or Kshs. 10,000, whichever is higher. You may check your Penalty table on KRA Page 

• Who to help you file? accountant, tax advisory who are usually referred to as Certified Public Accountants (the CPA (K)s) in Kenya.

2. File Annual Returns with BRS

Companies must file Annual Returns with the Business Registration Service (BRS) every year.

• Deadline: Within 30 days of the company’s anniversary of incorporation.

• Penalty: KES 5,000 per year for late filing, plus potential deregistration.

• Who to help you file ? Meet who ever helped you registered the company or advocate / company secretary around you .

3. Obtain a Valid Business Permit

Every business in Nairobi (or other counties) must have a Single Business Permit issued by the County Government.

• Renewed annually.

• Ensure the permit reflects the nature and location of your business operations. You may check the type of permit for your business if you operate from Nairobi County here 

• Penalty: Fines and possible closure of business premises.
• Who to help you file ? You can do it yourself here or consult a local secretary if in doubt ( but ensure you download the receipt or the certificate. It is also advisable that such payment is paid using mobile money MPESA for easier tracking at the county secretariat . Upon payment and issuance of permit certificate, ensure certificate copies are  kept in your office at all time.

4. Register with NSSF & NHIF

Do you have employees working for you already ? Employers must register with:

• NSSF for pension contributions. Established in 1965, is a mandatory national scheme whose main objective was to provide basic financial security benefits to Kenyans upon retirement. kindly check the NSSF Laws here 

• NHIF( National Health Insurance Fund for employee health insurance contributions. replaced in 2024 as Social Health Insurance Fund

• How to Calculate: computed as 2.75% of employee gross income as a monthly deductions to be remitted by the 9th of each month. kindly check details here

• Who to help you file ? Human Resources department or HR company like HRLeverage can assist you here

Penalty: Late remittance attracts penalties of 5% of the amount due and possible legal action.

5. Adhere to Employment and Labour Laws

Ensure you comply with the Kenyan Employment Act, including:

• Issuing written contracts.

• Adhering to minimum wage laws.

• Observing statutory leave and working conditions.

Non-compliance can lead to labour disputes, fines, and reputational damage.

6. Data Protection Compliance

If your business handles personal data, register with the Office of the Data Protection Commissioner (ODPC) and implement proper data handling policies in line with the Data Protection Act, 2019. this is often a tricky law. but every one is affected so far your company:

• Collects, processes, stores, or transfers personal data or sensitive personal data of individuals located in Kenya.

• Has employees, customers, or users in Kenya, regardless of whether the data processing is done locally or abroad.

How to: You are meant to appoint an internal or external Data Protection Officer (DPO) if your business:

Processes large volumes of personal data,  Processes sensitive data (e.g., health, financial, biometric).Offers services directly to the public.

You can check this out on ODPC page 

Penalty: Up to KES 5 million or 1% of annual turnover, whichever is higher.

you may want to create a policy on

• What data you collect and Why and how you collect it.

• How long such data will be stored stored.

• Who has access to the data.

• Security measures in place among others .

• 7. Annual Returns Filing & Statutory Mandate 

• All locally registered companies in Kenya (both private and public) are required to file Annual Returns with the Registrar of Companies every year.

By operation of the business it is suggested that you should disclose the following whether its chances or not in the course of the year,

• Directors and shareholders you have currently
• The share capital structure
• Updated registered office address
• Any changes in company details

The Penalty: 5,000 Kenyan Shillings for each year of delay + risk of being struck off the register.

Other Annual mandates  

• Beneficial Ownership Disclosure – Section 93A, Companies Act,
• Filing of Company Resolutions – Section 275, Companies Act, 2015 (14 days of passing the resolution.) Penalty for failure to file: Up to KES 200,000 per officer in default.
• Financial Statements & Tax Filings – Income Tax Act, CAP 470
• Annual financial statements and Corporate income tax returns (IT2) are filed by June 30 each year (for entities with a December year-end) .

  Penalties include:

  • KES 20,000 for late filing
  • 5% of unpaid tax or KES 10,000 (whichever is higher)
  • Additional interest at 1% per month until paid

For your Kenyan business , we advocate that you Stay Compliant. Stay Protected.

As a summary , if you need to do business with any company in Kenya , it is expected that you also ask for some compliance document such as their registration documents that shows the director of the company. This helps you to verify the supplier and vendors accordingly .

At Officephase , we provide you with space to work and explore across africa while remaining complaint in the territory we cover. We can support you by helping businesses like yours navigate the compliance landscape in Kenya—from incorporation to payroll, tax filing, HR compliance, and statutory registrations especially to our sister company HRLeverage. 

For some areas we dont cover from the above, we can refer you to someone within our network locally while helping you to stay compliant in Nairobi or anywhere in Kenya?
📩 Contact us today via here