Are you an investor who wants to invest in Buying and selling government bonds and selling corporate bonds?

Do I Need a KRA PIN to Open a Bank Account in Kenya? If you’re setting up a new business in Kenya, one of the first things you will need to do is open a bank account. A bank account is essential for any business, as it comes with several benefits. Opening a bank account is also relatively easy if you’re an individual and have proof of your identity and residence. However, this isn’t the case if you are a non-Kenyan or investor who has a company that invests in government security bonds and investments. The mandatory requirement to provide a Kenya Revenue Authority Personal Identification Number (PIN) when opening a bank account in Kenya led to a challenge for foreign investor

s who sought to participate in the local capital market. The Investors were required either to appoint a tax representative to account for their taxes in Kenya or register a branch of the company in Kenya in order to get the PIN, the risk associated with being a tax representative discourages many prospective tax agents from taking such a role. The cost associated with company registrations, and administrative and compliance costs of operating a company or a branch discouraged investors from participating in the local capital market.

LEGAL PROVISIONS

The First Schedule of Income Tax   Act 2022 provides a schedule of transactions and activities for which a KRA PIN is required beforehand. Under the schedule, a Kenya Revenue Authority PIN is required when opening an account with any financial institution or an investment bank in Kenya

However, section 12 (5A) of the TPA provides that the Commissioner may, upon receipt of an application made by or on behalf of any person or class of persons, exempt such person or class of persons from the requirement for a PIN for any of the transactions specified in the First Schedule to the TPA.

The amendment of the law provided the opportunity to investors of being granted an exemption that eliminates the administrative and compliance burden and, in a bid, to encourage foreign investors to participate in the local capital market. Some of the companies’ economic activities that can lead to a company being granted PIN exemption include:

• Buying and selling government bonds
• Buying and selling corporate bonds
• Trading in other investment securities listed at the Nairobi Securities Exchange (NSE)

The foreign investor should be able to demonstrate that he does not have a Permanent Establishment in Kenya and the income generated from Kenya is mainly passive, i.e dividends and interest income.

Where the foreign investor satisfies the Commissioner that their activities qualify for an exemption, they are granted a private ruling under TPA 65 which they can provide to banks or other financial institutions to open a bank or investment account in Kenya without being required to provide a KRA PIN certificate

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