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Transfer Pricing in Kenya

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Transfer Pricing in Kenya
Transactions subject to transfer pricing rules
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Many businesses trade with either a subsidiary, related enterprises or a different related party,what they are not aware of is that the transactions being undertaken are subject to transfer pricing rules. What is a transfer price and how does is affect you? Transfer pricing rules were introduced in Kenya on 1st July 2006 for the sole purpose of determining the arm's length price of transactions between related parties and administrative documents required by the tax authorities to determine the arm's length price.

Transfer pricing rules mostly applies  to multinationals who have foreign branches in Kenya or one or more subsidiary in Kenya and trades with each other. The services offered by the branch/ subsidiary most often will be treated as a "free service" since the owner of the company outside Kenya is the beneficiary of the service or goods and that's where transfer price is important. We have several methods used to compute transfer price which helps organization avoid payment of penalties and interest.

gas and oil

If you are involved in any of these transactions with a related party outside Kenya or where the permanent establishment is treated as a distinct establishment from head office and branches you need a transfer pricing policy document. Transactions subject to these rules includes the following listed below.

get in touch with us: + 254 735 679 308 | 020 2400 366 | This e-mail address is being protected from spambots. You need JavaScript enabled to view it | www.laxiaafrica.com


Transactions subject to transfer pricing rules.

(i) the sale or purchase of goods

(ii) the sale, purchase or lease of tangible assets

(iii) the transfer, purchase or use of intangible assets

(iv) the provision of services

(v) the lending or borrowing of money and

(vi) any other transactions which may affect the profit or loss of the enterprise involved

Talk to us today to guide you on the best method to apply in determining the price to charge for your transactions and more so to help you identify whether the enterprise transactions should be subjected to the rules.

get in touch with us: + 254 735 679 308 | 020 2400 366 | This e-mail address is being protected from spambots. You need JavaScript enabled to view it | www.laxiaafrica.com