Corporate taxation

The corporate tax rate for resident companies, including subsidiary companies of foreign parent companies, is 30%. The tax rate for branches of foreign companies and PEs is 37.5%.

Resident companies are taxable in Kenya on income accrued or derived from Kenya. Resident companies with business activities outside Kenya are also taxed on income derived from business activities outside of Kenya.

Non-resident companies are subject to Kenya corporate income tax (CIT) only on the trading profits attributable to a Kenyan PE.

Transfer pricing

Transfer Price Rules are provided in Legal Notice No:67 of 2006 within the Income Tax Act, which heavily relies on the OECD Transfer Pricing Guidelines.

Through Legal Notice No. 54 of 2012, the Commissioner may issue guidelines on application of the transfer pricing methods set out in the Transfer Pricing Rules.

The Finance Act 2014 expanded the scope to include the dealings between a non-resident and its permanent establishment (PE).

The Finance Act 2017, introduced section 18A, that brought transactions with taxpayers in preferential regimes within the scope of Transfer pricing (in line with BEPS action 5 on Harmful Tax practices)


Transfer Pricing Case Law

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