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[ESTABLISHING A BUSINESS ENTITY IN KENYA]
taxpayers who genuinely rely on borrowing as a means to facilitate and augment their business activities. The prior restrictions on interest deductions were perceived as onerous, and the latest amendments are poised to provide a measure of relief in this regard. Significantly, these revisions align substantively with the recommendations set forth by the Domestic Tax Base Erosion and Profit Shifting (BEPS) project. It is pertinent to note that BEPS, denoting Base Erosion and Profit Shifting, encompasses a spectrum of tax planning strategies employed by multinational enterprises to capitalize on inconsistencies and disparities in tax regulations, thereby mitigating their tax liabilities. The essence of these amendments is to ensure that interest expenses arising from loans obtained from residents are less likely to be exploited as a means to erode the taxable base. This initiative underscores the ongoing commitment to fortifying the integrity of the taxation system in addressing the challenges posed by international tax planning strategies. Special Business/ Investment Visa The East African nations have taken significant strides towards obviating the necessity for their respective citizens to obtain work permits as a precondition for engaging in economic activities within the regional community. An exemplar of this collaborative endeavor is evident in the case of Rwanda and Kenya, where their nationals enjoy unencumbered access to employment opportunities within each other's sovereign territories, thereby negating the requirement for work permits. In the Kenyan context, the process of securing work permits is generally characterized by its procedural simplicity and is delineated within the statutory framework articulated in the Kenya Citizenship and Immigration Act. The issuance of these permits is expressly regulated
by Section 40 of the aforementioned Act. It is noteworthy that two principal categories of permits are dispensed, namely work permits and residence permits, both being subject to specified conditions. To elucidate this point, a Class K residence permit is exclusively conferred upon individuals who can substantiate a guaranteed annual income exceeding the threshold of twenty-four thousand United States Dollars (USD 24,000) or its equivalent in Kenyan Shillings. Moreover, the statutory framework accommodates countries whose citizens are exempt from visa requirements when entering Kenya, as enshrined in the Kenya Citizenship and Immigration Regulations of 2012. In consonance with Section 13 of the Investment Promotion Act, holders of an Investment Certificate are accorded certain entitlements, which encompass the allocation of three Class A entry permits designated for management or technical personnel and three Class H, I, or J entry permits earmarked for proprietors, shareholders, or partners. It is imperative to underscore that the validity period of these permits is limited to a duration of two years. Work Permits issued under the Kenya Citizenship and Immigration Act vary depending on the profession/work of the investor: They are contained in the 7 th Schedule and are:
i.
Class A – Prospecting and mining
ii.
Class B- Agriculture and Animal Husbandry
iii.
Class C- Prescribed profession
iv.
Class D- Employment
v.
Class F- Specific manufacturing
vi.
Class
G-
specific
trade/business/consultancy
ILN Corporate Group – Establishing a Business Entity Series
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