The Finance Act, 2022 (“the Act”) which was gazetted on Friday, 8th July 2022 has introduced key changes in the transfer pricing (TP) regulatory framework in Kenya which will have extensive implications for taxpayers in Kenya.

  • Prior to the Finance Act 2022, the TP regulations in Kenya covered transactions between a taxpayer in Kenya and non-resident related parties and/or resident related parties operating in a preferential tax regime (“PTR”) in Kenya. However, effective 1 January 2023, the transfer pricing regulations in Kenya will also cover transactions between a taxpayer in Kenya and non-resident independent parties in preferential tax regimes.
  • The act has also introduced increased reporting requirements for multinational entities (MNEs) operating in Kenya in respect to transfer pricing.

I. Who will be affected by these changes?

As a taxpaying entity in Kenya:

  1. Do you purchase products and/or services from suppliers located in countries such as the United Kingdom (UK),  United Arabs Emirates (UAE) or Mauritius?
  2. Do you sell products or services to clients located in countries such as the UK, UAE or Mauritius?
  3. Do you receive financing/loan from lenders located in countries such as the UK, UAE or Mauritius, among other countries?
  4. Do you have any other form of business dealings with suppliers or clients located in countries such as the UK, UAE or Mauritius, among other countries?
  5. Do you trade with a related entity located in a special economic zone (SEZ) or an export processing zone (SEZ) in Kenya?
  6. Are you a constituent entity of a multinational enterprise (MNE)?

If the answer to any of the above questions is Yes, the transfer pricing changes introduced by the Finance Act, 2022 will affect you, among other entities in Kenya. 

II. Summary of key changes and their implications

Download Here : Transfer Pricing Changes