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Kenya, formally the Republic of Kenya (Swahili: Jamhuri ya Kenya), is an East African nation. Kenya is the world's 48th biggest nation by area, with 580,367 square kilometers (224,081 square miles). Kenya is the 29th most populated nation in the world, with a population of more than 47.6 million people according to the 2019 census. Nairobi is Kenya's capital and biggest city, whereas Mombasa is its oldest, now second-largest city, and first capital. Kisumu City is Lake Victoria's third-largest city and an inland port. Nakuru and Eldoret are two more prominent urban centers. Kenya is the third-largest economy in Sub-Saharan Africa, behind Nigeria and South Africa, as of 2020. Kenya is bounded to the northwest by South Sudan, to the north by Ethiopia, to the east by Somalia, to the west by Uganda, to the south by Tanzania, and to the southeast by the Indian Ocean. Its geography, climate, and population range widely, from cold snow-capped mountaintops (Batian, Nelion, and Point Lenana on Mount Kenya) with vast surrounding forests, wildlife, and fertile agricultural regions to temperate climates in western and rift valley counties, as well as dry, less fertile arid and semi-arid areas and absolute deserts (the Chalbi Desert and Nyiri Desert).
The first inhabitants of Kenya were hunter-gatherers, such as the Hadza people of today. Cushitic speakers initially arrived in Kenya's lowlands between 3,200 and 1,300 BC, according to archaeological dating of accompanying artifacts and skeleton material, a period known as the Lowland Savanna Pastoral Neolithic. Around 500 BC, Nilotic-speaking pastoralists (ancestors of Kenya's Nilotic speakers) started migrating from present-day South Sudan into Kenya. Between 250 BC and 500 AD, Bantu people arrived on the shore and in the interior. The Portuguese Empire initiated European contact in 1500 AD, and effective colonization of Kenya occurred in the nineteenth century with European exploration of the interior. Kenya today arose from a British Empire protectorate founded in 1895 and the following Kenya Colony, which started in 1920. Numerous disagreements between the UK and the colony sparked the Mau Mau movement in 1952 and the proclamation of independence in 1963. Kenya remained a member of the Commonwealth of Nations after its independence. The current constitution was approved in 2010 to replace the 1963 constitution of independence.
Kenya is a presidential representative democratic republic, with elected politicians representing the people and the president serving as the country's head of state and administration. Kenya belongs to the United Nations, the Commonwealth of Nations, the World Bank, the International Monetary Fund, COMESA, the International Criminal Court, and other international organizations. Kenya is a lower-middle-income economy, with a GNP of $1,840. Kenya is the biggest economy in eastern and central Africa, and Nairobi is a key regional economic center. Agriculture is the most important industry: tea and coffee are traditional cash crops, and fresh flowers are a rapidly rising export. Tourism, in particular, is a key economic engine in the service sector. Kenya is a member of the East African Community trade bloc, while it is classified as part of the Greater Horn of Africa by several international trade organizations. Kenya's greatest export market is Africa, followed by the European Union.
Within 12 months of work, an employee is entitled to a minimum of 21 days of paid regular leave.
There are 13 national holidays in Kenya. If a holiday comes on a Sunday, it is celebrated the next Monday.
An employee is entitled to a total of 14 days of sick leave every 12 months. The first 7 days are billed at 100% of the normal wage, and the remaining 7 days are charged at 50%. The employee must have worked for at least two months to be considered for this leave. A medical credential must also be provided by the employee.
Women are entitled to 91 days of paid maternity leave at 100% of their normal salary. To be considered, the woman must give her boss at least 7 days' notice before taking the leave and must be able to obtain a medical certificate.
Paternity leave is compensated for two weeks for fathers.
When a married employee adopts a child, the same maternity and paternity leave laws apply; but, instead of 7 days' notice for the mother, the spouse must be granted 14 days' notice.
Parents who are planning to adopt a child are entitled to a month of paid Pre-Adoptive leave. Parents must give their employer 14 days' notice and present the relevant adoption documents.
When an employer considers terminating an employee for misconduct, poor performance, or physical incapacity to perform tasks, the company must first hold a hearing. The employee has the right to be represented at the hearing by a union representative or another employee.
A letter of termination with justification must be issued. When an employer initiates the termination of an employment agreement, the company is required to pay the employee's final earnings on the termination date.
If the employee has worked for the employer for more than four weeks, the employer is required to provide a certificate of employment upon the termination of the employment agreement.
There is no need to give notice if the employee is paid on a daily basis. When an employee is paid on a monthly basis, either the employee or the employer must issue a 28-day written notice. Payment in lieu of notice is also a possibility.
The probation period in Kenya is 6 months. If the employer dismisses the employee during this time, 7 days’ notice or payment in lieu must be given.
There are no provisions in the law regarding severance pay except for when the reason for termination is redundancy. In this case, severance pay is 15 days of wages for every year of employment.
The standard work week varies by industry but is typically between 40 and 52 hours over six days. Night shift employees can work up to 60 hours per week. The night shift is from 6:30 p.m. to 6:30 a.m. Employees 16 years of age or younger are permitted to work up to 36 hours per week.
Overtime hours combined with regular daytime hours cannot exceed 116 hours in a two-week period. Overtime hours combined with nighttime work cannot exceed 144 hours in a two-week period. On weekdays, overtime is paid at 150 percent of the basic rate; on Sundays and public holidays, overtime is paid at 200 percent of the basic rate.
After six days of work, employees receive one day of rest. Those who work on a rest day are compensated at a rate of 200 percent of the basic rate. Employees who work on federal holidays are entitled to receive 200 percent of their regular pay.
The monthly minimum wage varies by industry as well as geographical location. Currently, the minimum wage ranges from 13,572.90 KES for a cleaner or gardener to 30,627.45 KES for a cashier or heavy commercial driver.
Kenya's social security system provides mandatory benefits such as old-age, disability, sickness, death, maternity, work injury, unemployment, and medical care to various groups of people such as children, employed, unemployed, retired, or elderly people.
Resident corporations are taxed in Kenya on income earned or generated in Kenya. Resident businesses having commercial operations outside of Kenya are likewise taxed on revenue generated by such activities.
Only the trading earnings attributable to a Kenyan PE are subject to Kenya corporate income tax (CIT) for non-resident firms.
The CIT rate for resident businesses, including subsidiaries of international parent companies, is 30%. The CIT rate for foreign company branches and private equity firms is 37.5 percent.
Resident workers are taxed on their global earned income, whether they work or provide services in Kenya or elsewhere. Residents are additionally taxed on any additional income earned in or generated from Kenya.
Non-resident workers are solely taxed on income generated in Kenya or derived from Kenya.
The tax rate is 10% for yearly taxable income of up to KES 288,000.
The tax rate is 25% for yearly taxable income of up to KES 388,000.
The tax rate is 30% for yearly taxable income exceeding KES 388,000.
The Finance Act of 2020 eliminated the exemption on employment income paid in the form of bonuses, overtime, and retirement benefits to employees whose taxable employment income before bonuses and overtime allowances does not exceed the lowest individual tax bands. It is worth mentioning that the tax reduction provided by the government in April 2020 for people earning a gross monthly income of up to KES 24,000 per month (currently the lowest tax band for individuals) as a way of mitigating the effects of the COVID-19 issue remains in force.
There are five kinds of supplies that attract VAT at various rates: 16% for local taxable supplies, 8% for local fuel supplies, 0% for zero-rated goods and exports, exempt supplies, and supplies that are not subject to VAT.
Employers of foreign nationals in Kenya have numerous alternatives under Kenya's immigration system. To enter the nation, most business travelers must apply for an eVisa. Immigration authorities at the port of entry will decide the authorized duration of stay in Kenya, which is normally 30 days, extendable twice for 30 days each at the Immigration Department in Kenya for a total of 90 days.
The Special Pass permits foreign people to labor in the United States for up to 90 days. Before a foreign individual goes to Kenya, a Special Pass application is submitted at the Kenya Immigration Department Headquarters.
The long-term work visa (Class D Permit) is intended for talented and experienced professionals or technical personnel, and it is sponsored by a Kenyan legal organization. Work permits are given for one or two years and may be renewed for the same length of time.
In Kenya, employment contracts may be oral or written, and they can be for an indefinite or defined period of time. A written contract is necessary for any task that lasts more than three months and must be prepared in the employee's native language. If the employee is illiterate, the contract must be stated in a language that the employee understands.
Changes to the employment contract, including but not limited to leave and other benefits, payment methods, and work location, must be made in writing and communicated to the employee within one month of the change.
Employers are obligated to preserve a copy of employee files for five years after the employee has been terminated.
An employer is expected to post a statement of the employee's rights in a visible location in the workplace that is accessible to all workers.
An employer is expected to provide the employee with an itemized pay statement along with their compensation.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
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Understanding any limitations on foreigners is the first step in learning how to set up your Kenya subsidiary. Kenya, for example, requires anybody who want to operate a foreign company in Kenya to get a work permit from the Ministry of Immigration. The sort of permission you need is determined by whether you are the business's owner or an employee.
Different cities in Kenya have different minimum salaries based on the kind of employment, demonstrating the importance of geography. Different areas may additionally have their own Kenya subsidiary laws that affect incorporation. If you are unfamiliar with the locations of the nation, we suggest contacting a consultant or lawyer for assistance.
Finally, you must choose one of three kinds of subsidiaries: a company, a branch office, or a representative office. Each company structure has benefits and drawbacks and allows you to participate in a variety of activities. Many businesses choose to register as a limited liability company because it provides them with the greatest flexibility in operating in Kenya.
The following actions will be required to set up your subsidiary as an LLC:
1. Obtaining and reserving a business name from the Registrar of Companies
2. Creating and stamping the Memorandum of Association, Articles of Association, and Statement of Nominal Capital
3. Execution of the Declaration of Compliance
4. Completing and submitting all necessary forms
5. Registering with the Kenya Revenue Authority to pay taxes (KRA)
6. Obtaining a business license
7. Signing up for social security services
8. Developing a corporate seal
You must abide by Kenya's subsidiary laws that relate to your particular company. Limited liability corporations (LLCs) must have at least two shareholders, two directors, and a physical and postal location in Kenya. While there is no minimum or maximum share capital requirement in Kenya, some businesses such as banking, foreign exchange, and others may have minimum nominal capital requirements.
An LLC cannot have more than 50 members, not counting the workers of the firm. If the number of members in your LLC surpasses 50, you must convert it to a public limited company. Keep in mind that the right to transfer shares is limited, and the public cannot participate.