The Kenya Revenue Authority (KRA) has invited members of the public, tax professionals, and business stakeholders to share their views on two new draft tax regulations that are expected to change how large corporations, particularly multinational firms, are taxed in Kenya.
In a public notice dated November 3, 2025, KRA announced the release of the Draft Income Tax (Advance Pricing Agreement) Regulations, 2025 and the Draft Income Tax (Minimum Top-Up Tax) Regulations, 2025.
The announcement was made by the Commissioner-General on behalf of the Cabinet Secretary for the National Treasury and Economic Planning.
The call for comments is part of the government’s commitment to public participation, as required by the Statutory Instruments Act and Article 201 of the Constitution, which promote transparency and accountability in financial management.
The first set of draft rules focuses on Advance Pricing Agreements (APAs), which are meant to bring more predictability to how multinational companies are taxed for cross-border transactions between related entities.
“In compliance with the Statutory Instruments Act, Cap. 2A, the Commissioner General, on behalf of the Cabinet Secretary, the National Treasury and Economic Planning, has developed the following Regulations: 1. The draft Income Tax (Advance Pricing Agreement) Regulations, 2025. 2. The draft Income Tax (Minimum Top Up Tax) Regulations, 2025,” KRA said.
An APA is essentially a deal between the taxpayer and KRA that defines in advance how pricing for transactions between related companies will be determined for tax purposes.
This arrangement is expected to reduce uncertainty, prevent double taxation, and minimize disputes over transfer pricing, one of the most complex areas of international taxation.
Under the proposed rules, companies will be able to apply for binding agreements that lock in how their related-party pricing will be treated for a specific period, providing stability in tax planning.
The APA framework was introduced through Section 18G of the Income Tax Act under the Finance Act 2025 and is scheduled to come into effect on January 1, 2026.
It allows KRA to enter into legally binding agreements with taxpayers on transfer-pricing methods for up to five years. However, the authority will also retain the power to cancel an APA if it finds that the agreement was obtained through misrepresentation of facts or false information.
The second draft regulation, the Income Tax (Minimum Top-Up Tax) Regulations, 2025, introduces rules to ensure that multinational companies pay a fair share of taxes even if they benefit from incentives or engage in aggressive tax planning strategies.
This proposal aligns Kenya with global tax reforms aimed at preventing profit shifting, a practice where multinational companies move profits to low-tax jurisdictions to reduce their tax burden.
Under the new system, multinational groups with an annual consolidated turnover of at least EUR 750 million, approximately Ksh 104 billion, will be required to pay a minimum effective tax rate of 15 per cent in Kenya.
If a company’s effective tax rate falls below that threshold, a “top-up tax” will be applied to make up the difference. This ensures that all qualifying multinational groups contribute a minimum level of tax regardless of how their global operations are structured.
The minimum top-up tax was first introduced in Kenya through the Tax Laws (Amendment) Act 2024. It applies to large multinational groups and targets situations where effective tax rates are artificially lowered. The additional tax will be calculated on excess profits after accounting for substance-based exclusions, such as actual business activity or tangible assets in Kenya.
Stakeholder participation
KRA has published both draft regulations on its official website for public review. Interested individuals and organisations have until Tuesday, December 2, 2025, to submit their feedback.
Submissions can be made in writing to the Commissioner-General at the KRA headquarters in Nairobi or sent by email. The authority has emphasised that stakeholder input will play a key role in shaping the final regulations, ensuring that the laws are both practical and transparent.
“The consultation process is important in shaping laws that are practical and transparent,” KRA noted in its statement.
Tax professionals, industry associations, and multinational corporations are expected to scrutinise the drafts closely, given that the new measures could significantly influence how companies plan, report, and comply with their tax obligations in Kenya.
Once the consultation period closes, KRA and the National Treasury will review the feedback, make necessary adjustments, and publish the final regulations.
Businesses operating in Kenya, especially those with cross-border structures, are being advised to start familiarising themselves with the proposed rules ahead of implementation.
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