Transfer Pricing
In Kenya, entities that are part of multinational enterprises (MNEs) that transact with their related non-resident parties need to ensure conformity with the transfer pricing (TP) provisions of the Income Tax Act (Section 18), Income Tax (Transfer Pricing) Rules, 2006 and Organization for Economic Cooperation and Development Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (“OECD TP Guidelines”).
TP methodology basically provides that pricing of transactions between related parties in different jurisdictions, known as controlled transactions, should be done as though the parties were dealing with each other at Arm’s Length. The Arm's Length principle states that the amount charged by one related party to another for a given transaction must be the same as if the parties were not related whereas a controlled transaction is a transaction between two (or more) enterprises that are considered as associated enterprises. Therefore, there is need for entities in Kenya with controlled transaction to develop or formulate a TP policy to govern controlled transactions.
We assist taxpayers in the preparation of TP policies and supporting documentation, structuring related party transactions for tax efficiency, reviewing compliance with TP laws and regulations and managing TP audits conducted by the revenue authority.
TP methodology basically provides that pricing of transactions between related parties in different jurisdictions, known as controlled transactions, should be done as though the parties were dealing with each other at Arm’s Length. The Arm's Length principle states that the amount charged by one related party to another for a given transaction must be the same as if the parties were not related whereas a controlled transaction is a transaction between two (or more) enterprises that are considered as associated enterprises. Therefore, there is need for entities in Kenya with controlled transaction to develop or formulate a TP policy to govern controlled transactions.
We assist taxpayers in the preparation of TP policies and supporting documentation, structuring related party transactions for tax efficiency, reviewing compliance with TP laws and regulations and managing TP audits conducted by the revenue authority.
