Multinationals like Google, Facebook, Amazon, Netflix and PayPal will be compelled to share data on revenue, profits and taxes in Kenya and other countries with the taxman if MPs approve proposed changes to the law.
The multinationals are required to give a breakdown of revenue, profits, taxes and other indicators of economic activities for each tax jurisdiction they operate under the convention.
The reporting rules apply to multinationals with annual consolidated group revenue of €750 million (about Sh95 billion) or more in the preceding fiscal year.
Multinationals like Google, Facebook, Amazon, Netflix and PayPal will be compelled to share data on revenue, profits and taxes in Kenya and other countries with the taxman if MPs approve proposed changes to the law.
Treasury Cabinet Secretary Ukur Yatani proposed the amendments to the Income Tax Act on Thursday to enable the Kenya Revenue Authority (KRA) assess global financial transactions by multinationals which operate in Kenya.
The move is aimed at helping the KRA conduct audits on the books of multinationals in a bid to identify revenues that were generated in Kenya, but declared in other jurisdictions — a practice technically known as transfer pricing.
“In order to promote greater tax transparency among multinational enterprises, I propose to amend the Income Tax Act to require multinational enterprises which have operations in Kenya to report their activities within Kenya and in other jurisdictions to the Commissioner-General, Kenya Revenue Authority,” Mr Yatani said.
The proposed changes are in line with the requirements under Global Forum on Transparency and Exchange of Information on Tax Matters which Kenya is part of after it ratified the Multilateral Convention for Mutual Administrative Assistance in Tax Matters (MAC).
The convention, backed by Organisation for Economic Co-operation and Development (OECD), compels Nairobi to share tax data with more than 140 jurisdictions.
The multinationals are required to give a breakdown of revenue, profits, taxes and other indicators of economic activities for each tax jurisdiction they operate under the convention.
The reporting rules apply to multinationals with annual consolidated group revenue of €750 million (about Sh95 billion) or more in the preceding fiscal year.
The taxman has long believed that Kenya loses hundreds of billions of shillings to global firms that under-declare sales made in Kenya leading to lower tax payments.
