Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

November 28, 2022
2022-6141

Kenya begins implementation of the Nairobi International Financial Center regime

  • The Nairobi International Financial Center is a flagship initiative under the economic pillar of Kenya’s Vision 2030.

  • The center is intended to provide a predictable and efficient business environment by creating opportunities to mobilize international savings and investments and encouraging innovative products in the financial sector.

  • The center offers local and international investors a wide array of benefits including but not limited to freedom to repatriate profits and realize investments.

Executive summary

The Nairobi International Financial Center (NIFC or Center) is a flagship initiative under the economic pillar of Kenya’s Vision 2030. The NIFC aims to fortify the country’s global competitiveness by optimizing the operating framework for financial services, transactions and incidental activities.

Essentially, the Center seeks to provide a predictable and efficient business environment by creating opportunities to mobilize international savings and investments as well as increasing employment opportunities in the financial sector among other benefits. This is set to not only make it easier to conduct these services but to also make it attractive to invest in the sector.

Detailed discussion

Legislative and regulatory framework

Notably, The NIFC was established by the Nairobi International Financial Centre Act of 2017. The Act establishes the Board, the Steering Council and the Tribunal, being bodies that are mandated to ensure that the Center realizes its objectives. Section 32 of the NIFC Act provides the following rights and benefits for organizations operating in the NIFC:

  • They are not subject to any nationalization or expropriation measures or any restrictions on private ownership.

  • They have the freedom to repatriate profits and realize investments.

  • They have the freedom to recruit and employ staff of their choice on such terms as they agree to, subject to work permit provisions and any international treaty obligations entered into by the Government in respect of the terms of employment of employees.

  • They may be owned up to 100% by persons who are not nationals of, or resident in, Kenya.

The operational framework of firms at the NIFC is guided by the NIFC Regulations of 2021.

Benefit of becoming an NIFC Member Firm

Firms that are licensed by the NIFC Authority will enjoy the following benefits among others:

  • Access to a one-stop shop for business registration and tax administration services.

  • On a need basis, targeted and phased tax incentives.

  • Linkages to other partners such as providers of green finance and potential partners for collaboration, thereby buttressing connectivity between local and international players.

  • Opportunities to secure venture and growth capital.

  • Enhanced connectivity to the continent by virtue of Nairobi being a tech hub.

  • Access to exceptional talent since the Center provides the freedom to recruit and employ staff regardless of nationality, while ensuring efficient and timely facilitation of obtaining work permits as well as providing immigration services.

  • Zero restrictions on absolute foreign ownership of companies in Kenya and repatriation of profits.

Prerequisites for benefiting as an NIFC member firm

In order to leverage the aforementioned benefits, a business is required to first be a provider of qualifying activities as outlined in the First Schedule of the NIFC Regulations.

Qualifying activities include finance, banking, insurance, and professional services, among other wide spectrum of services. Ordinarily, a member firm is expected to get the prerequisite licenses from primary regulators such as Central Bank of Kenya, and the Insurance Regulatory Authority, among others where applicable.

An applicant is required to complete the forms specified by the NIFC Authority and submit the completed forms accompanied by such documents specified in the forms or accompanying instructions. Additionally, they must provide such further information as the NIFC Authority may require and pay the required certification fees.

A certified firm must demonstrate to the satisfaction of the Authority at all times that they are fit and proper and that they have adequate resources, including financial resources. They must also have adequate compliance arrangements, including policies and procedures in order to comply with the applicable requirements. Their proposed business activities must also be in line with the NIFC core objectives and the strategic priorities of the Centre.

Notably, certification is open to existing local qualifying firms, international firms and the creation of new firms if they meet the requirements

Other considerations

The Center is currently operating as a virtual platform with no restricted physical location within which certified firms must set up their operations. This provides firms the flexibility of setting up their companies in any location but still requires the certification of the NIFC.

There are currently ongoing stakeholder engagements on various facets of the NIFC. Consequently, investors/potential participants should submit their proposals to the NIFC for consideration.

_________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young (Kenya), Nairobi

Ernst & Young Société d’Avocats, Pan African Tax – Transfer Pricing Desk, Paris

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

Ernst & Young LLP (United States), Pan African Tax Desk, New York

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more