Tax Compliance for Multinationals in Kenya

July 25, 2025

Table of Contents:

1. Key Takeaways: Tax Compliance for Multinationals in Kenya

2. Who is a Multinational in Kenya?

3. Types of Multinationals: With vs Without Permanent Establishment (PE)

4. Key Taxes Affecting Multinationals in Kenya

5. Key Tax Rules for Multinationals in Kenya

Transfer Pricing Compliance
Country-by-Country Reporting (CbCR)
Thin Capitalization Rule
EBITDA Rule (Effective from 2024)
Tax Compliance Certificate (TCC)
Digital VAT and e-Services Registration
Monthly and Annual Filings

6. Understanding Minimum Topup Tax (MTT) and Significant Economic Presence Tax (SEPT)in Simple Terms

7. FAQs on Tax Compliance for Multinationals in Kenya

Do Kenyans Abroad Pay Taxes in Kenya?
What is the EBITDA Rule in Kenya?
What is a Tax Compliance Certificate?
What Qualifies as a Multinational in Kenya?
What is the Tax Rate for Non-Resident Companies in Kenya?

8. Conclusion

9. Next Steps

10. Disclaimer

Multinational Enterprises (MNEs) operating in Kenya face an increasingly complex tax landscape. This makes Tax Compliance for Multinationals in Kenya more critical than ever, especially as regulations continue to tighten.

As the Kenya Revenue Authority (KRA) intensifies efforts to curb tax base erosion and ensure fairness, multinationals must adopt robust tax strategies to stay compliant.

Navigating Tax Compliance for Multinationals in Kenya requires not only understanding the law but also staying updated with evolving global tax frameworks.

This article unpacks everything you need to know about Tax Compliance for Multinationals in Kenya – from key definitions to the latest OECD-aligned rules like Minimum Top-Up Tax (MTT) and Significant Economic Presence Tax (SEPT).

Key Takeaways: Tax Compliance for Multinationals in Kenya

Multinationals in Kenya are subject to various tax rules depending on whether they have a Permanent Establishment (PE) or not.
Non-resident companies with PE are taxed at a corporate rate of 30%, while those without are subject to a 37.5% Rate
Key taxes affecting multinationals include Corporation Tax, VAT, Withholding Tax, SEPT, and MTT.
Compliance requirements include adherence to transfer pricing rules, EBITDA and thin capitalization limits, and obtaining a Tax Compliance Certificate from KRA.
Staying updated on Tax Compliance for Multinationals in Kenya is vital for avoiding penalties, audit risk, and preserving cross-border operational integrity.

Who Qualifies as a Multinational in Kenya?

A Multinational Enterprise (MNE) is a business that operates in more than one country. In Kenya, an MNE is defined as an entity that:

Is incorporated or registered abroad, but does business in Kenya, or
Has foreign subsidiaries, branches, or affiliates operating within Kenyan borders.

Types of Multinational Enterprises (MNEs)

Kenya recognizes two types of MNEs for tax purposes:

Type of MNE	Description	Example
With Permanent Establishment (PE)	A foreign company with a fixed place of business in Kenya (e.g., branch, office, factory)	Samsung Kenya office
Without Permanent Establishment	A foreign company doing business in Kenya digitally or remotely but with no physical presence	Netflix, Amazon

The classification determines your tax obligations and guides how you approach Tax Compliance for Multinationals in Kenya.

Type of MNE	Corporate Tax Rate
Resident Companies	30%
Non-Resident with Permanent Establishment	30%
Non-Resident Companies without PE	37.5%

Taxes Affecting Multinationals in Kenya

These are the taxes you’ll need to monitor closely to ensure full Tax Compliance for Multinationals in Kenya.

Here’s a quick rundown of the main taxes MNEs in Kenya may be subject to:

Tax Type	Description
Corporate Income Tax	A tax on net profits (30% for resident/non-resident with PE).
Withholding Tax (WHT)	Tax on payments to non-residents (royalties, dividends, interest, professional fees).
Value Added Tax (VAT)	Charged at 16% on goods/services. Even non-resident digital suppliers must register.
Digital Services Tax (DST)	3% tax on gross income from digital platforms (until SEPT fully replaces it).
Significant Economic Presence Tax (SEPT)	3% tax on turnover for digital businesses without PE (explained below).
Minimum Top-Up Tax (MTT)	Additional tax for MNEs paying <15% globally in any jurisdiction (explained below).

Key Tax Rules for MNEs in Kenya

To ensure tax compliance for multinationals in Kenya, the following rules must be followed:

1. Transfer Pricing Compliance

MNEs with related-party transactions must prepare Transfer Pricing Documentation.
As part of tax compliance for multinationals in Kenya, adhering to local transfer pricing in Kenya regulations is critical to avoid costly audits or penalties

Read our full Transfer Pricing in Kenya Guide on Bubi to learn what documents you need.

2. Country-by-Country Reporting (CbCR)

Ultimate parent entities of MNEs with global turnover over EUR 750 million must file a CbC Report with the KRA.

3. Thin Capitalization Rule

The Thin Capitalization Rule is a tax rule in Kenya that applies to foreign-controlled companies (where foreigners own more than 50%).
If your company borrows too much money compared to its own equity (more than 3 times your equity), then the Kenya Revenue Authority (KRA) may disallow some of your interest expenses when calculating your taxable income meaning you’ll pay more tax.

4. EBITDA Rule (Effective from 2024)

Interest expense deductions are capped at 30% of EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

5. Tax Compliance Certificate (TCC)

All MNEs must obtain a TCC from KRA when bidding for tenders, applying for licenses, or repatriating profits. It proves you’re tax-compliant.

6. Digital VAT and e-Services Registration

MNEs offering digital services in Kenya (e.g., streaming, software) must register for VAT – even if they lack physical presence.

7. Monthly and Annual Filings

File monthly VAT, PAYE, and WHT returns, and submit your annual income tax return via iTax on time.
Staying compliant with these rules is a cornerstone of successful Tax Compliance for Multinationals in Kenya.

SEPT and MTT Explained Simply

These two rules have a growing impact on Tax Compliance for Multinationals in Kenya, especially those operating digitally or across borders.

What is SEPT (Significant Economic Presence Tax)?

SEPT applies to non-resident digital businesses that don’t have a Permanent Establishment (PE) in Kenya but earn revenue from Kenyan users.

Rate: 3% on gross turnover

Example: Spotify, Uber, Zoom

Note: Significant Economic Presence Tax (SEPT) Replaces DST gradually in line with global tax changes.

What is MTT (Minimum Top-Up Tax)?

MTT is a tax on MNEs that pay less than 15% effective tax in any country where they operate.
Ensures large MNEs don’t shift profits to low-tax jurisdictions.
Kenya introduced MTT under the OECD’s GloBE Rules.

Plain Example:

If your total global tax rate is 10%, Kenya will impose a 5% top-up tax on your Kenyan income to bring it up to 15%.

Frequently Asked Questions (FAQs)

Below are answers to Frequently Asked Questions that affect Tax Compliance for Multinationals in Kenya

1. Do Kenyans Abroad Pay Taxes in Kenya?

Yes, Kenyan residents are taxed on their worldwide income. If you’re a non-resident, you’re taxed only on income sourced from Kenya.

2. What is the EBITDA Rule in Kenya?

The EBITDA rule limits the amount of interest expense you can deduct to 30% of your EBITDA. It applies mainly to foreign-controlled firms and aims to limit excessive interest deductions.

3. What is a Tax Compliance Certificate (TCC)?

A TCC is a document issued by KRA confirming you’re up to date with your tax filings and payments. It’s often needed for government tenders, licenses, or business permits.

4. What Qualifies as a Multinational in Kenya?

Any business operating in more than one country, or a foreign firm with a local branch, qualifies as a multinational under KRA definitions.
Knowing whether your business qualifies is the first step toward ensuring Tax Compliance for Multinationals in Kenya.

5. What is the Tax Rate for Non-Resident Companies in Kenya?

Non-resident companies with a Permanent Establishment are taxed at 30%.
Those without PE are subject to a Corporate Tax Rate of 37.5%

Conclusion

As Kenya aligns with global tax transparency measures, staying ahead of compliance requirements is no longer optional for multinationals – it’s essential.

Whether you’re a digital service provider, manufacturing firm, or regional headquarters, understanding the nuances of tax compliance for multinationals in Kenya will save you from penalties, audits, and reputational risk.

In an era of global tax reforms and increased scrutiny, robust Tax Compliance for Multinationals in Kenya is not just good practice – it’s a strategic imperative.

Next Steps

Need help with cross-border tax planning or transfer pricing documentation?

Bubi Alexander & Co. offers specialist tax advisory services tailored to multinationals. Reach out today.

Disclaimer

This article is for informational purposes only and does not constitute legal or tax advice. For customized support, please consult a licensed tax professional or reach out to Bubi Alexander & Co.

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