Many foreigners are increasingly showing interest in operating an online Forex brokerage in Kenya. As an emerging market with relative stability and a solid regulatory regime, Kenya is becoming an attractive destination for forex brokers.
To operate in Kenya, you require a Forex Broker License from the Capital Markets Authority (CMA) – the country’s regulatory body.
Here are some of the reasons why there is a high demand for a forex broker license. They include;
Double Taxation Agreements
Kenya is among few African countries that have signed double taxation agreements with other countries making it an attractive jurisdiction for international investors.
The main objective of DTA is to allocate the right of taxation between the engaging countries, to circumvent differences so taxpayers have equal rights and security, and to avert tax evasion.
Forex Broker
Under the double taxation agreement, a firm or its subsidiary that has paid taxes in the country of operation cannot be asked to pay levies of a similar nature for proceeds repatriated home.
The dialogue that leads to DTAs has been helpful to the interested parties in the past. Studies have shown that there is substantial Foreign Direct Investments and size asymmetry in mediation between elevated and low-income countries resulting in the preference for double taxation agreement.
As of April of 2022, countries with double taxation agreements with Kenya include; Canada, Denmark, France, Germany, Iran, South Korea, Norway, Qatar, Seychelles, South Africa, Sweden, United Arab Emirates, United Kingdom, and Zambia.
A Reliable Tax System Offering Multiple Benefits
Kenya’s favorable tax system has also made the country attractive to international investors. Not only is the tax system favorable, it also provides multiple benefits to investors.
The country is keen on building on the gains made in improving the ease of doing business in the country to attract foreign direct investment.
In the 2017/18 budget, it offered tax measures and legal and regulatory reforms to attract and retain investors like online forex brokers.
The provision provides that the benefits under a DTA in respect to exemption from tax, exclusion of an item from tax, or reduction of the tax rate, will only be available to a person in the other contracting state.
This also applies, where 50 percent or more of the underlying ownership (direct and indirect) of that company is held by an individual who is resident in that other state except companies listed on the stock exchange of that country.
A Stable Financial Service Sector with a Reliable Banking System
Financial services make up one of the economy’s most important and influential sectors. It provides the free flow of capital and liquidity in the marketplace. When the sector is strong, the economy grows, and companies in this industry are better able to manage risk.
Kenya’s financial sector is the third-largest in sub-Saharan Africa and it makes a significant contribution to economic growth and job creation. Through Vision 2030, the Government aims to create a ”vibrant and globally competitive financial sector.
Currently, there are 14 foreign commercial banks with branches, agencies, and other outlets throughout the country. These have made it easy for forex brokers to make easy money transactions together with their traders.
Why do Forex Brokers Want a License in Kenya?
Kenya is East Africa’s Economic Hub
Kenya has emerged in recent years as one of the fastest-growing economies in the world. The country has often been referred to as the key economic and commercial hub for East Africa.
For that reason, it has continued to underpin the notable economic development of the country and offer a wealth of opportunities for businesses and investors.
There has also been a sufficient business market for forex as the Kenyan economy grows daily. This has led to more establishments of forex brokerage firms.
Youthful Majority Population
Majority of youths – who make the largest population in Kenya have embraced the forex business. This has made the country an attractive forex brokerage hub.
More Kenyan traders have had the opportunity to engage in the forex market largely because of the live trading accounts that starts from as little as one US dollar.
It is also worth noting that there is a huge penetration of affordable internet connectivity. Smartphone access among the youthful growing population has served to offer the desired demand for forex traded products.
Conclusion
Are you a forex investor wishing to invest in Kenya? Kaith Consultants will help you every step of the way until you obtain an online forex brokerage license from the capital markets authority.