Kenya's new transfer pricing rules widen what multinationals must document

Kenya's new transfer pricing rules widen what multinationals must document

6 October 2026: Kenya has replaced its 2006 transfer pricing rules with the Income Tax (Transfer Pricing) Rules, 2026, which bring financing, insurance, business restructurings and derivatives into scope and require much more documentation for each related-party transaction.

Not yet independently verified. We could not open the Legal Notice itself, because Kenya Law blocked our fetch. The 12 August effective date is EY's, while the Kenya Law listing is dated 18 September. We will update this when it can be confirmed, and remove this note.

EY says the new rules took effect on 12 August 2026 and revoke the 2006 version. They draw heavily on the OECD Transfer Pricing Guidelines and on BEPS measures, including country-by-country reporting. The Kenya Law database lists them as Legal Notice 186 of 2026.

The 2006 rules applied to cross-border related-party deals in goods, tangible and intangible assets, services and lending. EY says the 2026 rules extend to transactions with preferential tax regimes and add financing, insurance and reinsurance, business restructurings, cost distribution arrangements and derivatives. A new commodity rule generally uses publicly quoted prices around the shipping date for related-party commodity imports and exports, subject to arm's-length adjustments.

The larger change is in what the tax authority can ask for. EY says the Commissioner of Domestic Taxes may now request significantly more information for each category of controlled transaction, where the old rules gave only a general power to ask for books and documents. Business Daily reports that companies must set out the parties involved, transaction value, settlement currency, contractual terms and trading model, and disclose intra-group payments and receipts broken down by the tax jurisdiction of the foreign payer or recipient. It says the Treasury list of items the Kenya Revenue Authority (KRA) will check has grown from about 10 to at least 25.

Law firm Bowmans Kenya, quoted by Business Daily, says the enhanced documentation requirements “substantially increase the compliance burden for taxpayers”. Business Daily adds that KRA had already marked inter-company loans and royalty payments as sensitive in its transfer pricing reviews, and said in March that it would focus on taxpayers whose declared profits do not match expected taxable income.

Finance teams at multinationals with Kenyan subsidiaries should check that existing related-party files can supply the per-category detail, in particular payments split by the counterparty's tax jurisdiction.

Sources

• Kenya Law: The Income Tax (Transfer Pricing) Rules, 2026 (Legal Notice 186 of 2026, not opened by us), 18 September 2026
• EY Tax News: Kenya issues new transfer pricing rules, 6 October 2026
• Business Daily: Mbadi expands KRA transfer pricing checks in tax cheat fight, 6 October 2026