Repatriating Profits From Kenya: Certificates, Rights and Tax for Foreign Tech Investors

A foreign investor who has put money into a Kenyan tech company eventually wants to know one thing plainly: can the profit actually come home, and what does Kenya take on the way out. The mechanics sit across two different statutes that are easy to confuse because both use the word “certificate,” and the tax layer sits on top of both.

Two Different Certificates, Two Different Statutes

The Investment Promotion Act gives a foreign investor who commits at least USD 100,000 an “investment certificate,” which, as we cover in our guide to Class G investor permits, is mainly the route to entry permits for expatriate staff. It is a different, older instrument, the Foreign Investments Protection Act, that actually governs the right to send profit and capital out of the country.

Under section 3 of the Foreign Investments Protection Act, a foreign national who proposes to invest foreign assets in a Kenyan enterprise may apply to the Cabinet Secretary for a certificate that the enterprise is an “approved enterprise” for the purposes of that Act. The Cabinet Secretary issues the certificate where satisfied the enterprise will further Kenya’s economic development or otherwise benefit the country, and the certificate itself records the amount of foreign assets invested, divided between capital and other categories the Act specifies.

The Right to Transfer, Once Certified

Section 7 of the Foreign Investments Protection Act is the operative provision for repatriation. Notwithstanding any other law in force, the holder of a certificate may transfer out of Kenya, in the approved foreign currency and at the prevailing rate of exchange, the profits arising from the investment, including retained profits not yet capitalised, after tax, and the capital itself as specified in the certificate. An increase in the capital value of the investment arising from selling assets or revaluing them is expressly carved out and is not treated as “profit” transferable under this provision. Kenya does not currently operate a general exchange control regime requiring Central Bank approval before money can leave the country; section 7’s own wording, transfer “at the prevailing rate of exchange” with no reference to a separate consent process, reflects that. The certificate is what gives the investor a clear statutory right to rely on, rather than leaving repatriation to administrative discretion.

An investor who never applies for a Foreign Investments Protection Act certificate is not thereby barred from repatriating profit; nothing in Kenyan law generally prohibits a company from paying a dividend to its shareholders wherever they are resident. What the certificate adds is a specific statutory entitlement, on the terms set out in the certificate itself, which is a materially stronger position than relying on the general absence of a legal obstacle if that position is ever challenged or if the regulatory environment changes.

The Tax Taken Before It Leaves

Whether or not a certificate is in place, tax is due before profit crosses the border. A dividend paid to a non-resident shareholder attracts withholding tax at 15% under the Income Tax Act’s Third Schedule, reduced only where a tax treaty in force with the shareholder’s home country provides a lower rate; see our guide on checking whether your country’s treaty with Kenya is actually in force before assuming a reduction applies. If the Kenyan operation is structured as a branch rather than a subsidiary, the mechanism is different again: section 7B of the Income Tax Act imposes a separate 15% tax on the branch’s repatriated income, calculated by a net-asset formula rather than triggered by a declared dividend, which we set out in full in our guide to how Kenya taxes a branch versus a subsidiary. Either way, the Foreign Investments Protection Act certificate governs the right to move the money; it does not itself reduce or exempt the tax due on it.

What This Means for a Tech Investor in Practice

For most foreign-backed Kenyan tech companies, the practical sequence is: incorporate and, if the investment size and immigration position justify it, obtain an Investment Promotion Act investment certificate for the permit benefits it carries; separately apply for a Foreign Investments Protection Act approved enterprise certificate to lock in the statutory right to transfer profits and capital on defined terms; declare dividends through the ordinary company law process; and account for withholding tax, or the branch repatriation tax, at the point of transfer. Treating these as one certificate, or assuming the immigration-focused investment certificate also secures the repatriation right, is the most common and avoidable confusion investors run into.