On 4 September 2023, the Kenya Revenue Authority (KRA) published draft income tax (Transfer Pricing) rules 2023 for public comment. The income tax rules are designed to harmonize with the provisions of the Finance Act 2022, which introduced significant amendments to the Income Tax Act specifically on related party transactions, and introduction of Country-by-Country Reporting (CbCR) obligations for multinational corporations operating in Kenya.
The purposes of these Rules are –
(a) to provide guidelines to be applied by related enterprises, in determining the arm’s length prices of goods and services in transactions involving them, and
(b) to provide administrative regulations, including the types of records and documentation to be submitted to the Commissioner by persons involved in controlled transactions.
In addition, the draft transfer pricing (TP) rules are primarily influenced by the OECD guidelines and, once officially adopted, will supplant the existing transfer pricing rules established in 2006.
Comments on the draft Income Tax (Transfer Pricing) Rules for 2023 will be accepted until 22 September 2023.
