The Kenya Revenue Authority (KRA) has introduced the gazetted Income Tax (Transfer Pricing) Rules, 2026, which impose stricter pricing requirements on multinational companies operating in Kenya.
The new rules replace the 2006 framework and expand the categories of transactions subject to scrutiny, including commodities, financing, insurance, restructurings, cost distribution arrangements and derivatives.
Companies must now use publicly quoted prices on recognised exchanges or approved price-reporting agencies for commodity transactions, calculating taxable income on the average price 15 days before and after shipment, unless a higher export price or lower import price is paid to an independent third party.
PwC Kenya manager for tax and legal services Charity Kihumba said the rules will raise compliance expectations and strengthen KRA’s position in transfer pricing reviews, particularly for taxpayers with commodity, financing, restructuring and other complex related-party arrangements.
PwC partner Titus Mukora described the changes as “one of the most commercially significant changes for taxpayers dealing in products for which quoted market prices exist.”
The regulations also require detailed documentation of contracts, transaction values, cross-border payments and explanations of price setting, and may demand audited accounts and financial statements from related foreign entities.
Legal experts note that the rules aim to make it harder for multinational groups to shift profits out of Kenya and reduce local tax liabilities, though PwC warned that compliance could be difficult for Kenyan subsidiaries lacking access to foreign parent financial information.
