The Public Benefit Organizations Act, 2013 (the Act) came into force on 14th May 2024 pursuant to Legal Notice No. 78 of 2024.
Public Benefit Organization (PBO) is a voluntary membership or non-membership grouping of individuals or organizations, which is autonomous, non-partisan, non-profit making and which is:
- organized and operated locally, nationally, or internationally.
- engages in public benefit activities in any of the areas set out in the Act.
- is registered as such by the Public Benefit Organizations Regulatory Authority.
The following changes have been made:
- It repeals the Non-Governmental Organizations Co-ordination Act of 1990.
- The NGO Co-ordination Act was silent on the period within which the Executive director would process an application to register the NGO. This has been addressed and the Act now requires the Authority to consider applications within sixty days. If no decision is made within the said days, the PBO may apply to the PBO Tribunal for an order requiring the Authority to issue a certificate of registration or to communicate the refusal of registration along with the reasons for the refusal.
- NGOs registered under the NGO Coordination Act will be automatically registered as PBOs and will have up to one year from the Commencement Date (14th May 2024) to seek registration as a PBO.
- The NGOs that were exempted by the minister from registration under the NGO Coordination Act shall have three (3) months from the Commencement Date (14th May 2024) to apply for registration.
- An international organization which is registered outside Kenya and intends to operate in Kenya shall apply to the Public Benefits Organization Authority for a certificate to operate in Kenya.
- An international organization that intends to directly implement any activities or programs in Kenya or operate from Kenya to implement any activities or programs in another country is required to have at least one-third of its directors who are Kenyan citizens and who are residents of Kenya.
- Public benefit organizations must submit a statement of audited accounts, a certified copy of financial statements, and a report on the organization’s activities to the Public Organizations Authority within six months after the end of each financial year.
Benefits of registration as PBOs
- One will get exemptions from:
- Income tax on income received from membership subscriptions and any donations or grants.
- Income tax on income acquired from the active conduct of income producing activities if the income is wholly used to support the public benefit purposes for which the organization was established.
- Tax on interest and dividends on investments and gains earned on assets or the sale of assets.
- Stamp duty.
- Court fees.
- Preferential treatment under value-added tax, customs duties in relation to imported goods or services that are used to further their public benefit purposes.
- Incentives for donations by legal and natural persons.
- Employment tax preferences
- Special tax incentives for donations to form endowments, prudent investment policies, etc.
- Preferential treatment in public procurement procedures and bidding for contracts.
- Provision of information to enable it to contribute effectively to the policy processes.