Kenya Revenue Authority (KRA) has called on the public and industry players to give their views on two draft tax rules that will guide how large companies, especially multinationals, are taxed in Kenya.

In a notice dated November 3, 2025, the taxman released the Draft Income Tax (Advance Pricing Agreement) Regulations, 2025, and the Draft Income Tax (Minimum Top-Up Tax) Regulations, 2025.

The notice was issued in line with the Statutory Instruments Act and Article 201 of the Constitution, which require public participation before new laws or regulations take effect. The Commissioner-General stated on behalf of the Cabinet Secretary for the National Treasury and Economic Planning.

The draft Advance Pricing Agreement (APA) regulations aim to create a structured system that allows taxpayers and KRA to agree in advance on the pricing of transactions between related companies across borders.

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Such transactions often form the basis of transfer-pricing disputes, and the APA framework is expected to reduce tax uncertainty for multinational firms operating in Kenya. Once implemented, companies will be able to apply for binding agreements that set how their cross-border related-party pricing will be treated for tax purposes over a fixed period.

The APA framework was introduced through Section 18G of the Income Tax Act under the Finance Act 2025, and it will take effect on January 1, 2026. The law allows KRA to enter binding agreements with taxpayers on transfer-pricing methods for related-party transactions for up to five years. It also gives KRA power to void an APA if it was obtained through misrepresentation of facts.

The second draft, on Minimum Top-Up Tax (MTT), seeks to enforce a minimum effective tax rate for large multinational groups. It is part of Kenya’s alignment with global tax reforms that require multinationals to pay a minimum tax rate, regardless of incentives or tax planning strategies.

If a group pays less than the required minimum in Kenya, a top-up tax will apply to bridge the gap. The move is designed to curb profit shifting and ensure fair tax contribution from firms with global operations.

The minimum top-up tax was introduced through the Tax Laws (Amendment) Act 2024, requiring multinational groups with annual consolidated turnover of at least EUR 750 million (approx. Ksh 104 billion) to pay a minimum effective tax rate of 15 per cent in Kenya.

The measure targets large multinationals and applies when their effective tax rate falls below 15 per cent, with the shortfall charged on excess profits after applying substance-based exclusions.

Public input deadline set

KRA has published the draft regulations on its website for public review. Interested individuals and organisations have until Tuesday, December 2, 2025, to submit comments. Feedback can be sent to the Commissioner-General at the KRA headquarters in Nairobi, or by email.

The authority noted that the consultation process is important in shaping laws that are practical and transparent. Businesses, tax experts, and professional bodies are expected to study the drafts closely, as the regulations will affect cross-border trade structures, tax-risk planning and compliance processes.

Once the consultation period closes, KRA and the National Treasury will revise the drafts and issue final regulations. Companies are encouraged to prepare early and understand the new requirements, as both measures will have a direct impact on how multinational groups plan and report their taxes in Kenya.