Country by Country(CbC) reporting

Country by Country(CbC) reporting requires Multinational Enterprises (MNE) to file annually, a report containing data on the global allocation of the MNE’s income, taxes and details of their economic activities in the various jurisdictions they have operations.

These measures are aimed at enhancing transparency through comprehensive exchange of information between revenue authorities.

The CbC requirements are part of Action 13 of the Base Erosion and Profit Shifting (“BEPS”) Action Plans, that require MNEs to file CbC reports with tax authorities in countries where they have a taxable presence.

In the Finance Act 2022, Kenya enacted the Country-by- Country Reporting (CbC Reporting) rules for multinational groups with turnover greater than KES 95B (roughly EUR 750M) including extra ordinary and investment income.

This is part of the Base Erosion and Profit Shifting (BEPS) agenda by the OECD to end the information asymmetry that arises when tax authorities do not have access to taxpayer information held in other countries

Prior to filing the CbC Report, a notification will have to be made to the commissioner electronically via CBCR@kra.go.ke . The template to be filled and filed is available on KRA’s website under downloads section.

The notification obligations, content of the CbC report, non- compliance penalties and our opinion have all been summarised here and on the link below.

According to the latest update released on 22^nd November 2022, Kenya became a signatory to the multilateral competent authority agreement on the exchange of country-by-country reports (CbC MCAA) on 9^th September 2022.

Kenya is now a signatory to both the CbC MCAA and the Multilateral Convention on Mutual Administrative Assistance in tax matters (the convention) which Kenya signed up to in 2020. This will enable the automatic exchange of financial information in tax matters between Kenya and the other signatory members.

This means that non-residents MNEs that file the CbC report in another jurisdiction that is a signatory will not be required to file in Kenya. The Kenya Revenue Authority shall access the CbC reports from the other jurisdiction where the same has been filed. However, a notification will be done by the constituent entities indicating the entity that is responsible for the filing obligations.

Kindly reach out to us for assistance with the evaluation of your CbC status and your expected compliance requirements.