Companies doing business in Kenya are subject to the following taxes. This applies to residents, including corporations, with annual sales between approximately $8,500 and $500,000. The applicable rate is 1% on gross turnover. A supplier is defined as “any person who operates (or actively attempts to make) a business of direct supply of goods for resale in the Kenyan market to a retailer, including any person residing anywhere in the world”. This definition gives the Retail Code extraterritorial application as it binds suppliers who are not based in Kenya but supply goods to retailers for consumption in the Kenyan market. The Retail Code applies to retailers and suppliers. A retailer is defined as “any person who operates a business in Kenya for the actual retail market as a supermarket, hypermarket or self-selection business”. The Retail Code does not define the terms “supermarket”, “hypermarket” or “self-selection company”, making its scope unclear. For example, it`s not clear if the retail code applies to online stores. A company has a legal personality separate from its shareholders. In this context, the liability of a shareholder is limited to the unpaid amount on the shares held by the shareholder. However, courts may disregard the separate legal personality of the corporation and hold shareholders liable (i.e.
break the corporate veil) if shareholders have intentionally used the corporation as a vehicle for fraud or deception. The Business Law (Amendment) Act No. 2 of 2021 (the Act) entered into force on 31 May. March 2021. The amendments introduced by the Act are intended to support business activities in Kenya. Vanjohi, A. (2009). Challenges for SMEs in Kenya. Available online at www.kenpro.org/challenges-facing-smes-in-kenya-and-the-efforts-in-progress/ The 2020 National Information and Communication Technology Policy Guidelines (the 2020 ICT Policy) have been promulgated to require 30% local ownership for companies authorized by the Communications Authority of Kenya to operate in the ICT field.
On 9 April 2021, certain amendments to the ICT Directive 2020 were published by Notice No. 3192 (the amendment to Directive 2021), as summarized below. The Retail Code also requires retailers and suppliers to have written supply agreements or joint business plans containing the minimum time limits required under section 24A(7) of the Competition Act, including payment terms, payment dates, and dispute resolution mechanisms. As a Commonwealth country, Kenya`s legal system derives from English common law. The Companies (Beneficial Ownership Information) Regulations 2020 define a beneficial owner as “the natural person who ultimately owns or controls an entity or arrangement, or the natural person on whose behalf a transaction is made, and includes persons who exercise ultimate effective control over an entity or legal arrangement”. QUESTION: Dear Cathy, I started making shea butter beauty products in my kitchen, first as a hobby, but it became a small business. The demand for my products is so high that I plan to quit my job to focus on my new business. What legal issues need to be considered during production? The first consideration relates to the laws associated with the company`s site or location. Land laws have an important aspect known as “land use”. As noted earlier, it is simply a regulation restricting land use in certain geographic areas. Environmental aspects must also be taken into account in the cottage industry.
It is important to ensure that you comply with environmental laws and regulations, especially when it comes to aspects such as waste management and others. A corporation is a separate legal entity from its owners, the shareholders. A corporation is able to own assets and liabilities that are separate and distinct from those of its members, enter into contracts and sue and be sued separately. The Investment Protection Act established the Kenya Investment Authority, which is a one-stop shop for obtaining all necessary investment licenses, approvals and exemptions. This serves to facilitate business in Kenya. A trademark is a distinctive word, logo or symbol used to identify goods in the form of goods and services of one manufacturer and to distinguish those goods from those of another manufacturer. The registration of a trademark gives the trademark owner the exclusive right to use it for product identification and provides legal protection by giving the owner the possibility to seek redress to restrict unauthorized use of the trademark by third parties. The trademark owner acquires the right to license the trademark to third parties for commercial use.
