Transfer pricing in Kenya

Transfer pricing in Kenya at a glance

Regulation Type National regulations
Are there specific transfer pricing regulations? Yes
Submission deadline N/A
Submission deadline upon request Directly
Annual update required No
Official language requirements English
Potential impact of penalties N/A

 

Kenyan tax law

Rules for transfer pricing in Kenya are based upon:

  • Income Tax (transfer Pricing) Rules 2006
  • Income Tax Act Section 18(3)

OECD

Rules for transfer pricing in Kenya are as such not based on the OECD Transfer Pricing Guidelines. Only for the use of the transfer methods the OECD methods are applicable.

Methods

Accepted methods

Accepted methods are: 

  • the comparable uncontrolled price method
  • the resale price method
  • the cost plus method
  • the profit split method (contribution analysis or residual analysis)
  • the transactional net margin method

Priority of methods

Rules for transfer pricing in Kenya prescribe that the most appropriate method should be used. If none of the above mentioned methods would result in an arm’s length price, others methods may be used.

Documentation requirements

Information that should be included in the documentation:

  • The selection of the transfer pricing method and the reasons for the selection
  • The application of the method, including the calculations made and price adjustment factors considered
  • The global organization structure of the enterprise
  • The details of the transaction under consideration
  • The assumptions, strategies and policies applied in selecting the method
  • Other background information regarding the transaction

Language

Rules for transfer pricing in Kenya prescribe that all documentation should be submitted in English.

Requirements to prepare documentation annually

In Kenya there are no requirements to update the documentation annually. Only if significant changes in a year occur, it is common practice that the documentation is updated to reflect the updates. 

Submission deadline upon request by tax authorities

Upon request of the tax authorities a taxpayer should submit its documentation directly.

Advance Pricing Agreements

General

In Kenya it is not possible to obtain an Advance Pricing Agreement.

Terms

Not applicable.

Penalties

In Kenya there are no specific transfer pricing penalty regulations in place. This means that ordinary penalties apply.

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