Kenya is a participant in the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan, which includes implementing Country-by-Country Reporting (CbCR). The Kenya Revenue Authority (KRA) oversees these requirements to promote tax transparency and curb profit shifting by multinational enterprises (MNEs).

This guide is designed to help CFOs and tax professionals of MNEs operating in Kenya understand their obligations under the CbCR framework, including compliance criteria, filing requirements, penalties, and useful resources.

Applicability of CbCR in Kenya

Criteria for Reporting:
CbCR obligations in Kenya apply to MNE groups meeting the following conditions:

• The group’s consolidated annual revenue exceeds KES 95 billion (Kenyan shillings, equivalent to €750 million) in the preceding fiscal year.
• A Kenyan entity acts as either:
  • The Ultimate Parent Entity (UPE), or
  • A constituent entity of an MNE group.

Local Filing Requirements:

• A Kenyan entity may need to file a CbC report if:
  • The UPE is not required to file in its jurisdiction, or
  • The jurisdiction of the UPE does not have an effective information exchange agreement with Kenya.

Relevant Legislation:

• Kenya’s CbCR requirements are outlined in the Income Tax (Transfer Pricing) Rules, 2006, as amended.

Reporting Requirements

Content of the CbC Report:
The CbC report must include jurisdictional aggregated financial and tax data of the MNE group, including:

• Revenue (from related and unrelated parties),
• Profit or loss before tax,
• Income tax paid and accrued,
• Stated capital, retained earnings, and tangible assets,
• Number of employees.

Notification Requirement:

• Kenyan entities must notify the KRA about the identity and jurisdiction of the entity responsible for filing the CbC report.

Submission Platform:

• Reports must be submitted electronically through platforms designated by the KRA, adhering to the OECD’s XML schema standards.

Resource:
Detailed filing guidelines can be accessed on the KRA’s official website: Kenya Revenue Authority.

Filing Deadlines

• CbC Reports: Must be filed within 12 months after the fiscal year-end of the MNE group.
  • Example: For a fiscal year ending 31 December 2023, the report must be filed by 31 December 2024.
• Notification to the KRA about the reporting entity is due at the start of the fiscal year.

Penalties for Non-Compliance

Penalties and Sanctions:
Non-compliance with CbCR requirements in Kenya can result in:

• Financial penalties for late submission, failure to file, or inaccurate reporting.
• Enhanced scrutiny from the KRA, including potential audits and investigations.

Mitigation Measures:

• Penalties may be reduced or waived if reasonable justifications for delays or errors are provided to the KRA.

Confidentiality and Data Exchange

Data Confidentiality:

• CbC reports filed with the KRA are safeguarded under Kenya’s confidentiality laws and used solely for tax risk assessment.
• Kenya exchanges CbC information with jurisdictions that have operational tax treaties and agreements with Kenya.