The government has unveiled new draft tax regulations that will make global companies operating in Kenya pay at least 15 per cent in corporate taxes. The move is meant to stop profit shifting and ensure multinational firms contribute fairly to the national revenue.
Treasury Cabinet Secretary John Mbadi said the proposed Income Tax (Minimum Top-Up Tax) Regulations, 2025, are open for public input until December 3. The new rules will bring Kenya in line with the global tax reforms championed by the Organisation for Economic Co-operation and Development (OECD).
According to the draft, the tax will apply to multinational groups earning at least €750 million, which is about Ksh96.92 billion. Each company will calculate its effective tax rate in Kenya, and if it falls below 15 per cent, it must pay an additional top-up tax to meet the minimum rate.
For example, if a company pays only 10 per cent after applying deductions or incentives, it will pay an extra 5 per cent as top-up tax. This ensures that all large corporations pay a fair share regardless of where they are based or how they arrange their finances.
Treasury said the move targets multinational firms that use loopholes to reduce their tax bills through complex financial structures. It will also promote transparency and discourage aggressive tax planning, especially in technology, energy, logistics, and manufacturing sectors.
Companies will now be required to file a Global Anti-Base Erosion (GloBE) Information Return and a Top-Up Tax Return within six months after their financial year ends. The tax itself must be paid within four months after the end of the year of income.
Failure to comply will attract penalties under the Tax Procedures Act. However, certain entities like pension funds, sovereign wealth funds, public institutions, and real estate investment vehicles will be exempted from the new rule.
The draft also spares companies engaged in international shipping if they can prove that their strategic and commercial operations are managed from within Kenya.
The Treasury hopes that these measures will not only seal revenue leaks but also position Kenya as a country that enforces fair global tax practices.
By NAirobi