The Finance Act 2021 revised the definition of permanent establishment effective 1 July 2021. Under the new definition, the term “permanent establishment” means:

A fixed place of business through which business is wholly or partly carried on and includes:

a place of management;
a branch;
an office;
a factory;
a workshop;
a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources;
a warehouse in relation to a person whose business is providing storage facilities to others;
a farm, plantation or other place where agricultural, forestry plantation or related activities are carried on; and
a sales outlet;

A building site, construction, assembly or installation project or any supervisory activity connected to the site or project, but only if it continues for a period of more than 183 days, with the further provision that connected activities carried on by closely related enterprises for more than 30 days at the same site, construction, or project will be taken into account in determining if the 183-day threshold is met;
The provision of services, including consultancy services, by a person through employees or other personnel engaged for that purpose, but only where the services or connected business in Kenya, continue for a period of, or periods exceeding in the aggregate, 91 days in any 12-month period commencing or ending in the year of income concerned;
An installation or structure used in the exploration for natural resources, provided that the exploration activities continue for a period of not less than 91 days; and
A dependent agent of a person who acts on their behalf in respect of any activities which that person undertakes in Kenya including habitually concluding contracts, or playing the principal role leading to the conclusion of contracts that are routinely concluded without material modification by the person.

However, the definition excludes the following activities if they are of a preparatory or auxiliary character:

The use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;
The maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;
The maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
The maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;
The maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity; and
The maintenance of a fixed place of business solely for any combination of activities mentioned above.

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