Welcome to the second issue of ENSafrica's Kenya in brief, focusing on the latest legal and regulatory updates across Kenya's corporate commercial and banking and finance industries. Click here to read the first edition.

corporate commercial

  • ESG
    • Climate Change Amendment Bill
      • On 18 July 2023, Kenya's Cabinet considered the proposed Climate Change (Amendment) Bill, 2023 which seeks to provide a framework for Kenya's participation in domestic and international carbon markets. This is in pursuance of Kenya's obligations under the Paris Agreement.
      • Read more about the Bill here.
  • Data protection
    • The Office of the Data Protection Commissioner ("ODPC") recently issued two penalty notices, signalling the regulator's increased efforts to enforce the Data Protection Act, 2019 (DPA).
    • ODPC Penalty Notices against Whitepath Company Limited and Regus Kenya
      • Whitepath faced accusations of sending unsolicited messages to the contacts of complainants by accessing their mobile phone contacts. In addition, the company's staff were alleged to have harassed both the complainants and their contacts. In another case, Regus was accused of frequently spamming the complainants with automated improper information.
      • Both companies were issued with penalties of KES5-million pursuant to section 63 of the DPA and Regulation 20 of the Data Protection (Complaints Handling and Enforcement Procedures) Regulations reflecting the ODPC's drive to enforce data protection in the country.
  • Technology, media, and telecommunications
    • Revocation of 30% substantive local ownership requirement
      • The government is set to drop the 2020 ICT Policy requirement that licensed companies in the ICT sector should have at least 30% substantive local ownership. Telecoms were required to comply with the ownership rule by March 2024. This move by the government is driven by the realisation that the regulation made it impossible for large corporations to invest in Kenya's ICT sector.
    • The Kenya Information and Communications (Amendment) Bill, 2023 ("KICA Amendment Bill")
      • The KICA Amendment Bill seeks to amend the longstanding Kenya Information and Communications Act of 1998 by proposing the formulation of guidelines on critical infrastructure assets. It also seeks to penalise illegal origination or termination of international traffic without proper origination and termination agreements with local players. The Bill suggests expanding administrative penalties for broadcast licence breaches by including more lenient measures like enforcement orders and other appropriate penalties representing a shift from licence suspension/revocation as the sole enforcement mechanism.
      • Please see the draft KICA Amendment Bill here.
  • Immigration
    • The President has proposed to remove visa fees for African nationals travelling to Kenya for business purposes. The President announced this during the African private sector dialogue conference on the African Continental Free Trade Area ("AfCFTA"). This development is viewed as a positive step for Kenya's policy of African integration, aligning with the goals of the AfCFTA to eliminate trade barriers and enhance intra-African trade.
  • Competition
    • Bilateral Agreement between the Competition Authority of Kenya and the East African Community Competition Authority
      • The memorandum of understanding between the two competition regulators aims to:
        • facilitate information sharing during joint investigations, market inquiries and studies; adopt a single merger notification and analysis regime by 2024; and
        • foster transparency and predictability with respect to multijurisdictional merger notifications in order to reduce transaction costs for businesses.
  • Tax
    • Finance Act, 2023
      • On 26 June 2023, the Finance Bill, 2023 was signed into law. The High Court, however, suspended the implementation of the Finance Act on 30 June, pending a petition challenging the implementation of the Act to be heard and determined by a three-judge bench that has been constituted by the Chief Justice.
      • A more detailed analysis will be published once the court delivers a judgment on the implementation of the Act.
    • Value-Added Tax (Electronic, Internet, and Digital Marketplace Supply) Regulations, 2023 ("EIDMS Regulations")
      • The Cabinet Secretary for National Treasury and Economic Planning issued the EIDMS Regulations, effective from 15 March 2023, replacing the VAT (Digital Marketplace Supply) Regulations, 2020.
      • These new regulations set the value-added tax rate at 16% for all taxable electronic, internet, and digital marketplace supplies made in Kenya.
      • Suppliers should register for VAT in Kenya within 30 days if: the supplies are made from an export country to a recipient in Kenya; the person is conducting business in Kenya in accordance with section 8(2); and the recipient is in Kenya or the supplier is paid through a registered bank under the Banking Act, or the payment is authorised in Kenya. The regulations cover the place and time of supply, invoicing requirements, input tax claims, tax accounting and payment, and penalties for non-compliance.
    • Tax Procedures (Common Reporting Standards) Regulations, 2023
      • The Cabinet Secretary for National Treasury and Economic Planning issued the Tax Procedures (Common Reporting Standards) Regulations, 2023 with retrospective effect from 1 January 2023. The Regulations provide for reporting obligations and due diligence procedures to be conducted and complied with by Reporting Financial Institutions ("RFIs"). It further provides for the record-keeping obligations for RFIs and the general due diligence requirements that they must establish maintain and document for identification of reportable accounts maintained by such institutions. The Regulations were developed as a result of the addition of section 6B to the Tax Procedures Act, 2015 which establishes the Common Reporting Standard obligations which Kenya is mandated to comply with under the Convention on Mutual Administrative Assistance in Tax Matters.
  • Land
    • The Supreme Court of Kenya has issued a judgment in the case of Dina Management Limited v County Government of Mombasa & 5 others (Petition No. 8 (E010) of 2021) that will expand the nature of due diligence conducted in property transactions. In effect, the Supreme Court stated that where the procedure of the initial acquisition of a title is deemed unprocedural or unlawful, all subsequent transfers of the title are considered invalid as no legal or equitable interest is deemed to have passed; and buyers are required to conduct a full investigation into the title to ensure that there is a good root to the title to ensure that the legal and equitable interest in the property is valid.
    • For a more detailed analysis on the judgment, please read our article here.
  • Labour and employment
    • National Social Security Fund (NSSF) contributions are now capped at 12% of an employee's monthly pensionable earnings, with a 6% contribution from the employer and a 6% contribution from the employee after the Court of Appeal approved the implementation of the NSSF Act, 2013. The Act introduces two contribution tiers: Tier 1 for earnings up to the lower limit, and Tier 2 for earnings exceeding the lower limit. For the first year of implementation, the lower earnings limit is KES6 000 and the upper earnings limit is KES18 000. An appeal is pending at the Supreme Court of Kenya regarding the decision to implement the new contribution rates, but its implementation has not been suspended.
    • For a more detailed analysis of the new contribution rates, please read our article here.

banking and finance

  • Digital payments
    • The Central Bank of Kenya has issued the Kenya Quick Response Code Standard 2023 to guide payment service providers and financial institutions regulated by the Central Bank of Kenya to issue Quick Response (QR) codes to consumers and businesses that use digital payments. This is a critical step in the implementation of the National Payments Strategy 2022 - 2025. It aims to increase the adoption of digital payments in the country and drive innovation in the payment systems sector.

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