Kenya

Resident companies are taxable in Kenya on income accrued or derived from Kenya. Resident companies with business activities outside Kenya are also taxed on income derived from business activities outside of Kenya.

Non-resident companies are subject to Kenya corporate income tax (CIT) only on the trading profits attributable to a Kenyan PE.

The CIT rate for resident companies, including subsidiaries of foreign parent companies, is 30%.

The CIT rate for non-residents, including branches of foreign companies and PEs, is also 30%.

Special rates

There are special rates for certain resident and non-resident companies as set out below.

Significant economic presence (SEP) tax

The Tax Laws (Amendment) Act, (TLAA) 2024 repealed the digital service tax (DST), which was applicable at the rate of 1.5%, and replaced it with the SEP tax, which has an effective rate of 3%.

The Finance Act, 2025 has expanded the scope of SEP tax. SEP tax now applies to all income derived by non-residents from services provided through the Internet or any electronic network, not just through a digital marketplace.

Additionally, the Act removed the turnover threshold eliminating the de minimis exemption, meaning all non-residents providing qualifying services will now be liable to SEP tax, regardless of size. Previously non-residents with an annual turnover of less than KES 5 million were exempted from SEP tax.

Currently, there is Draft Income Tax (Significant Economic Presence Tax) Regulations, 2025 undergoing public participation.

Pillar Two - Minimum Top-Up Tax

Kenya’s Tax Laws Amendment Act of 2024 amended the ITA to incorporate the Section 12G provision on Minimum Top-up Tax modelled around OECD / Inclusive Framework (IF) Global Anti-Base Erosion (GloBE) Model rules, which have the status of a ’common approach‘. This means that while it is optional and not mandatory for a country or a jurisdiction such as Kenya to implement the minimum top-up tax in its local law, if a jurisdiction chooses to, it must follow the GloBE Model rules framework for the adopted rule to have the ’qualified‘ status.

The Kenyan minimum top-up tax provision applies to covered persons, i.e. resident entities or PEs in Kenya that are part of a multinational group with a consolidated annual turnover of at least EUR 750 million or more in at least two of the four years immediately preceding the tested year of income. The tax is triggered when the combined effective tax rate for the Kenya entity (covered person) falls below 15% global minimum effective tax rate.

Out of the three GloBE rules, Kenya has so far adopted only one, the {Qualified} Domestic Minimum Top‑Up Tax (QDMTT). This represents partial adoption of the GloBE rules by Kenya.

The Finance Act of 2025 provides for the resultant top-up tax to be paid by the end of the fourth month after the end of the tested year of income. This due date aligns with the payment of the final tax for a year of income. The first payment is likely to be due by 30 April 2026 for businesses with 31 December year-ends considering the TLAA effective date was 27 December 2024.

Detailed regulations on how the law will operate are expected to be published to provide administrative procedures for implementation of the minimum top-up tax provision.

For more detailed information and the most recent updates, please visit PwC’s Pillar Two Country Tracker.

Local income taxes

There are no county or provincial taxes on income, as all taxes are collected by the national government. However, county governments are empowered by the Constitution to impose property and entertainment taxes at the county level.