This guide outlines the requirements and procedures for an investor intending to establish a building materials manufacturing operation in Kenya (such as cement products, steel, tiles, blocks and roofing materials). Building materials are not excisable goods; the applicable pathway is therefore the standard manufacturing establishment sequence set out below.

1. Business Establishment (Business Registration Service)

Register the investment vehicle.

-        Most foreign investors incorporate a local company for foreigners or register a branch of a foreign company. Requirements typically include the proposed company name, memorandum and articles of association, directors' and shareholders' details (including passport copies and photographs for foreign nationals) and a registered office address.

-        Companies without a company secretary or resident director must appoint a contact person who shall be a natural person with a permanent residence in Kenya.

2. Investor Registration and Investment Certificate

-        Complete investor registration online: https://services.investkenya.go.ke/  and apply for the investor registration through the Kenya Investment Authority. The certificate requires a minimum investment of USD 100,000 for foreign investors under the Investment Promotion Act and unlocks dedicated facilitation support, including tax PIN facilitation, immigration facilitation, bank account opening facilitation, and tax and customs exemption facilitation.

3.. Land, Premises and Environmental Compliance

-        Where a site is being acquired, undertake a land search, transfer of land and stamp duty payment through the relevant land registry. Because building materials manufacturing is classified as a high-impact activity, an Environmental Impact Assessment (EIA) licence for medium and high-risk projects must be obtained from the National Environment Management Authority (NEMA) before construction begins.

5. Factory /Plant Construction

-        The project must be designed and supervised by registered professionals (Architect, Engineer and Quantity Surveyors) and must get all statutory approvals.

-        Obtain relevant construction permits from the county Government where the factory will be located 

-        Register the construction project with the National Construction Authority

-        Power and water connections where applicable must be done through the relevant organizations. Borehole drilling must get relevant approvals.

-        Traffic management plan may be required: Access approvals from road agencies where development touches major roads during construction

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6. Operating Licences

-        Obtain the county business licence for the business premises - the Unified Business Permit in Nairobi County or the single business permit of the relevant county.

-        Register the workplace with the Directorate of Occupational Safety and Health Services (DOSH) through the online certificate of workplace registration, with plant and equipment examination and lift registration where applicable.

-        Product certification through the Kenya Bureau of Standards (KEBS Standardisation Mark) is also required for construction materials, although that procedure is administered outside the portal.

7. Employer and Staff Obligations

-        Register as an employer with the National Social Security Fund (NSSF) and the Social Health Authority (SHA). Employers are required to make statutory contributions for employees under Kenya's social security and health schemes, Housing Levy, where applicable

-        For foreign personnel, apply for the appropriate immigration status: a Class G (Investor) work permit for the principal investor and Class D (Employees) or Class F (Manufacturing) work permits for expatriate staff, together with dependants' passes where required.

8. Optional Incentive Route: Export Processing Zones/special Economic Zones

Licences from Export processing zones or Special economic zones will be required if one is setting up in the economic zones . Economic zones offer an alternative establishment track with tax holidays and duty exemptions on inputs and equipment.

9. TAX AND TAXATION

Corporation Tax

-        37.5% for a non-resident company operating through a branch or permanent establishment in Kenya.

-        30% if the business is incorporated in Kenya as a resident company.

Value Added Tax (VAT)

-        Standard rate: 16% on most taxable goods and services. Registration required if annual taxable turnover reaches KES 5 million or more. 

Withholding Tax (WHT)- Applies to payments such as:

·       Management and consultancy fees

·       Royalties

·       Interest

·       Dividends

·       Rent paid to non-residents

For non-residents without a permanent establishment, withholding tax is often the final tax on that income. Rates depend on the type of payment and any applicable double taxation agreement (DTA). 

PAYE (Pay As You Earn)- If the company employs staff in Kenya, it must deduct and remit income tax from employees' salaries. 

Customs Duty and Import VAT

-        If importing equipment or goods into Kenya, customs duties, import VAT, and possibly excise duty may apply.

Excise Duty- Applies only to specific goods and services such as alcohol, tobacco, fuel, telecommunications, and certain financial services.

In case of further clarifications and support to set up, do not hesitate to reach out to me Agnes Nduku Advocate, 0729173627: aginduku@gmail.com  info@panamadvocates.co.ke