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Navigate Kenya Revenue Authority (KRA) audits with strategic foresight. Align your operations with the latest Finance Act requirements and OECD-based documentation standards.
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Transfer pricing in Kenya is anchored in Section 18(3) of the Income Tax Act. The KRA has significantly ramped up enforcement, targeting Multinational Enterprises (MNEs) that utilize intra-group service charges and royalties to reduce the Kenyan tax base.
With the introduction of new CbC Reporting rules, the KRA now has unparalleled visibility into global group structures. Contemporaneous documentation is no longer optionalit is the first line of defense in any tax inspection.
The foundational rules requiring transactions between related parties to be at arm's length, following OECD methodologies.
Introduced rigorous CbCR, Master File, and Local File submission requirements for groups meeting specific revenue thresholds.
Automated systems now match customs declarations with TP disclosures to identify pricing inconsistencies.
The threshold for global group transparency.
Ultimate Parent Entities (UPEs) in Kenya with consolidated group revenue > KES 95 Billion must file a CbC Report.
Subsidiaries must file a CbCR Notification by the end of the financial year to identify the reporting entity.
Required for MNEs with cross-border dealings.
The KRA requires a Master File and Local File to be maintained. Documentation must be submitted within 30 days of a formal request.
Failure to produce a contemporaneous report during an audit often leads to the KRA using its own "internal" data to adjust prices.
High-scrutiny areas for KRA inspectors.
Intra-group management and technical fees are capped for deductibility based on the "benefit test."
Documentation must prove that the service was actually rendered and that the Kenyan entity derived economic value from it.
Bespoke documentation tailored to KRA's specific functional analysis standards.
Ensuring timely compliance with Finance Act reporting obligations.
Economic analysis using Pan-African and Emerging Market database sets.
Expert representation during field audits and at the Tax Appeals Tribunal.
The KRA's focus on the digital economy and commodity pricing is at an all-time high. Is your 2025/26 policy robust enough?
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