The Kenya Revenue Authority (KRA) is tightening tax compliance among multinational companies by expanding its use of cross-border financial data to track firms suspected of profit shifting.
This is part of a broader move toward digital tax enforcement, which uses data to inform policy decisions, and follows similar initiatives elsewhere in the world.
This strategy, which is largely supported by modern data analytics, aims to save billions in tax revenue losses while also assuring a more equitable tax base.
The move toward intelligence-led tax enforcement is anchored on Kenya’s participation in the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
This framework allows for the exchange of tax information with 147 jurisdictions, closing gaps that firms have historically used to their advantage, says Weldon Ng’eno, KRA commissioner for the medium and large taxpayers.
The KRA is now relying on mandatory Country-by-Country reports from large multinationals.
These documents provide auditors with a clear view of global revenue, profits earned, and taxes paid across different countries, helping the authority flag high-risk taxpayers for closer review.
International tax information exchange is helping the authority see exactly where multinationals earn their profits and where they actually pay tax, says Ng’eno.
The push is being reinforced by stricter disclosure requirements for related-party transactions, such as inter-company loans, management fees, and royalties.
Under the Finance Act 2025, firms must provide comprehensive transfer pricing documentation for all related-party transactions exceeding $385 000 (KSh 50m.)
At the same time, Kenya is taking a strategic approach to global tax reform by prioritising the Qualified Domestic Minimum Top-Up Tax.
This ensures that a minimum effective tax rate of 15% is collected in Kenya on the profits of large multinationals, preventing other countries from claiming "top-up" taxes under the Organisation for Economic Co-operation and Development (OECD)’s Pillar Two rules.
The OECD’s Pillar Two rules establish a global minimum corporate tax rate of 15% for large multinational enterprises with annual revenues exceeding €750 million.
These rules ensure that large multinational enterprises profits are taxed at this minimum rate in every jurisdiction where they operate, primarily through a top-up tax mechanism to eliminate tax advantages in low-tax jurisdictions.
The KRA intends to protect the domestic tax base, preserve Kenya’s appeal to investors, and ensure national interests remain aligned with regional coordination efforts, the authority stated.
By shifting from manual audits to data-driven intelligence, the KRA aims to reduce the "tax gap" in the multinational sector, which has faced increased scrutiny over the use of offshore hubs to lower Kenyan tax liabilities.
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