How to Set Up an Entity in Kenya

Kenya is one of East Africa’s most dynamic business hubs, offering access to a fast-growing consumer market, a strong fintech ecosystem, and regional reach across the East African Community (EAC). Nairobi in particular has become a base for multinationals expanding into Africa, supported by improving infrastructure, a skilled workforce, and an increasingly digital government administration.

Opening a legal entity in Kenya is relatively structured and largely online, but it can still feel bureaucratic for foreign companies unfamiliar with local registration, tax, and employment requirements. Common challenges include coordinating multiple authorities, understanding local tax registrations, and meeting ongoing compliance obligations. However, establishing a local entity facilitates local invoicing, direct employment of staff, and the ability to maintain a stable, long-term presence in one of Africa’s most important markets.

Disclaimer: This content is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult official sources before acting.

What does “opening an entity” mean in Kenya?

Opening an entity in Kenya means registering a business with the national company registry to obtain legal status, followed by registration with tax and employment authorities. This process allows a company to operate legally, enter into contracts, open bank accounts, and hire employees in Kenya. Foreign businesses typically choose between incorporating a local subsidiary or registering a foreign company branch.

Entity overview in Kenya

Here is a summary of the key aspects of company formation in Kenya:

Step-by-step guide: How to open an entity in Kenya

Step 1: Choose the right structure

Foreign companies most commonly incorporate a private limited company, which provides limited liability and flexibility in ownership and management. A branch office may be suitable for short-term or representative activities, but it does not create a separate legal entity and exposes the parent company to local liabilities.

Step 2: Verify business name availability

Business names are searched and reserved through the online portal during the registration process. Names must be unique and must not be misleading or restricted without approval. Name reservations are typically valid for 30 days.

Step 3: Prepare incorporation documents

To incorporate a private limited company, the following documents are required:

• Memorandum and Articles of Association (Model forms available via BRS)
• Statement of Nominal Capital (Form CR1)
• Statement of Directors and Shareholders (Form CR2)
• Beneficial Ownership Disclosure (Form BOF1)

All statutory forms can be completed and submitted digitally through the BRS portal.

Step 4: Register with the Business Registration Service

Incorporation is completed online via the BRS eCitizen platform. Upon approval, the company receives a Certificate of Incorporation and a unique company registration number, confirming its legal existence in Kenya.

Step 5: Register for tax and social security

After incorporation, companies must register with the Kenya Revenue Authority to obtain a PIN, corporate income tax account, and VAT registration if applicable. Employers must also register with the National Social Security Fund and the National Hospital Insurance Fund for employee contributions.

Step 6: Open a corporate bank account

A local corporate bank account is required to operate in Kenya. Banks typically request incorporation documents, KRA PIN certificates, beneficial ownership details, and proof of address. Know-your-customer checks can take one to two weeks, particularly for foreign-owned companies.

Step 7: Set up payroll and employment compliance

Before hiring, employers must set up compliant payroll processes, register for PAYE withholding, and ensure employment contracts comply with Kenyan labor law. Statutory benefits include social security and health insurance contributions, as well as adherence to minimum wage and leave requirements.

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Post-registration obligations

After incorporation, companies in Kenya must stay compliant with local governance, tax, and employment laws. Typical requirements include:

• Tax and financial reporting: File corporate income tax returns annually and VAT returns monthly with the Kenya Revenue Authority, following IFRS as adopted in Kenya.
• Corporate registers: Maintain up-to-date records of directors, shareholders, and beneficial owners and report changes to the Business Registration Service within the legally required timeframe.
• Compliance tracking: Monitor tax, licensing, and corporate filing deadlines through a compliance calendar or service provider to avoid penalties.
• Licenses and renewals: Renew applicable business permits and sector-specific licenses with relevant national or county authorities, typically on an annual basis.
• Recordkeeping: Retain accounting, payroll, HR, and transaction records for at least seven years, as required under Kenyan law.
• Employment law compliance: Adhere to labor, benefits, social security, and data-protection regulations enforced by the Ministry of Labour and Social Protection.

Taxes and financial considerations

Key obligations for Kenyan entities include:

• Corporate income tax: 30%, payable in annual installments with a final return filed after the financial year end
• VAT: 16% standard rate, with mandatory registration once taxable supplies exceed KES 5 million (≈ $38,500) annually
• Payroll/social contributions: Employer contributions to NSSF and NHIF, with PAYE withheld from employee salaries
• Accounting standards: IFRS as adopted in Kenya

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Expand internationally with Deel

Whether you’re hiring through an EOR or establishing your own local entity, Deel’s all-in-one platform gives you everything you need to expand into the United Kingdom—quickly, compliantly, and with confidence. From market entry to ongoing operations, Deel helps you hire, onboard, and manage teams seamlessly from day one.

With Deel, you can:

• Test new regions using Deel’s local entities through our Employer of Record service—hire employees compliantly, delegate payroll and taxes, and access localized employment contracts.
• Open entities with Deel Entity Setup, where our team manages everything—from incorporation and tax registration to coordination with local experts.
• Centralize your compliance and records with Deel Entity Management, including automated filings, calendar reminders, and visibility across all entities.
• Integrate with Deel Payroll and Deel HR for compliant payments, benefits, and workforce oversight—all in one platform.

For companies transitioning from the EOR model to owned entities, Deel ensures a smooth handover and consistent compliance every step of the way. Enter new markets, onboard talent, and manage your global workforce—all through one unified platform.

FAQs

How long does it take to open an entity in Kenya?
Typically, 2–4 weeks. Find out how long setup takes with our Entity Setup Calculator.

What is the minimum capital required?
No statutory minimum capital is required for most private limited companies.

Can foreign companies own 100 % of an entity in Kenya?
Yes, 100% foreign ownership is allowed in most sectors.

Do I need a local director or representative?
No local director is required, and directors do not need to be Kenyan residents.

How much does it cost to register an entity?
Government fees and basic setup costs typically range from KES 30,000 to 100,000 (≈ USD 230–770), excluding professional services. Find out the setup cost with our Entity Setup Calculator.

Can I hire employees before the entity is fully registered?
Typically, no. However, Deel’s Employer of Record (EOR) lets you hire and pay talent immediately while your entity setup is in progress.

Can Deel help me open an entity in Kenya?
Yes. Deel Entity Setup manages the end-to-end process — from registration to payroll compliance—in over 100 countries. Deel’s local experts handle documentation, filings, and legal requirements on your behalf.

Does Deel offer ongoing compliance and payroll support?

Yes. Deel offers both managed services and self-service tools to help you stay compliant.

If you’re using Deel Entity Management, Maintenance, EOR, or Payroll, our team handles payroll, benefits, filings, and compliance obligations on your behalf.

For teams managing their own entities, Deel Compliance Hub makes staying compliant simple by providing real-time regulatory updates, risk alerts, and workforce insights across 150+ countries. Proactively manage compliance with our Compliance Monitor, Workforce Insights, and an AI-powered Worker Classifier, staying ahead of changing employment laws.

Can I switch from Deel EOR to my own entity later?
Yes. Deel supports seamless transitions when you’re ready.