Kenya: Draft regulations proposing new framework for advance pricing agreements (APAs)
Public consultation open until December 2, 2025
The Kenya Revenue Authority on November 3, 2025, issued draft regulations proposing a new framework for advance pricing agreements (APAs) to enhance tax certainty for cross-border transactions. The public consultation period is open until December 2, 2025.
The Draft Income Tax (Advance Pricing Agreement) Regulations, 2025, aim to strengthen Kenya's transfer pricing framework by introducing an APA framework, which enables taxpayers and the Commissioner to agree in advance on a transfer pricing methodology for controlled transactions. This initiative is expected to provide greater certainty over tax outcomes across multiple years, foster a collaborative approach to resolving transfer pricing disputes, and facilitate alignment with treaty partners through bilateral or multilateral APAs. Additionally, rollback provisions are included that would apply agreed methodologies to prior, non-time-barred years when appropriate.
Practical implications of the proposed APA regime for taxpayers would include documentation and pre-filing requirements, application and renewal fees, and ongoing compliance obligations. The draft regulations would propose nonrefundable fees of KES 5 million (approximately US$38,650) for new applications and KES 2.5 million for renewals, which may impact accessibility for smaller entities.
Taxpayers would also need to submit an annual compliance report within six months of each year-end, supported by documentation.
Read a November 2025 report prepared by the KPMG member firm in Kenya