Worldwide transfer pricing reference guide 2014

Kenya (continued)
Documentation requirements (continued)
• The details of the transaction under consideration
• The assumptions, strategies and policies applied in selecting the method
• Other background information regarding the transaction
The books of accounts and other documents shall be prepared in, or translated into English at the time the transfer price is established.
Where a taxpayer avers the application of arm’s length pricing, such taxpayer shall:
• Develop an appropriate transfer pricing policy
• Determine the arm’s length price as prescribed under the guidelines provided under these rules
• Furnish documentation evidencing their analysis upon request by the Commissioner
Documentation deadlines
The deadline for preparing documentation is the same as the deadline for filing the tax return (i.e., within six months after year end).
Appropriate documentation must be provided upon request.
Statute of limitations on transfer pricing assessments
According to Section 56(3) of the Income Tax Act, the statute of limitations for transfer pricing assessments is seven years after the
relevant year of income, unless the Commissioner has reasonable cause to believe that fraud or gross or willful neglect has been
committed in connection with, or in relation to, taxable income for the year.
Return disclosures/related party disclosures
According to the corporate tax return format, the taxpayer is required to declare the name(s) and address(es) of related party(ies)
outside Kenya.
Transfer pricing-specific returns
There are no specific transfer pricing returns for tax payers.
Frequency of tax audit and transfer pricing scrutiny by the tax authority
The taxing authority has intensified transfer pricing audits and has been issuing communications challenging already filed transfer
pricing policies. The likelihood of occurrence of tax audits is high while the likelihood of a transfer pricing review as part of general tax
audit is medium. The likelihood of the transfer pricing methodology being challenged in a transfer pricing review is high.
APA opportunity
In Kenya, no specific APA rules are applicable.
Expected reaction to OECD Report on BEPS
There has not been any reaction from the tax authorities up until January 2014.
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