Three-Tier Reporting Requirements by Multinational Entities
Three-Tier Reporting Requirements by Multinational Entities.


In collaboration with the Organisation for Economic Co-operation and Development (OECD), Kenya became the 12th African country and 94th jurisdiction globally to sign the Multilateral Convention on Mutual Administrative Assistance in tax matters (MCAA). Since then, the Kenyan government has been proactive in putting in place appropriate frameworks that would allow the exchange of information on request and automatic exchange, in a step to fight tax evasion and avoidance while enhancing transparency between member jurisdictions that ratified the convention.

Effective 1 st January, 2022, Kenya has embraced the three-tier reporting by Multinational Entities (MNEs) as envisaged in OECD’s Base Erosion and Profit Shifting (BEPS) Action 13, for MNEs operating in Kenya as either an Ultimate Parent Entity (UPE) or a constituent entity with a tax residence in Kenya. The Cabinet Secretary for Treasury and Planning issued relevant guidance on implementation of the Country by country reporting.

In this alert, we shall demystify the three-tier reporting requirements:

  • Country by Country Report (CbCR)
  • Master File and
  • Local File

Country by Country Report (CbCR)

Multinational entities whose group turnover including extraordinary or investment income is Kshs 95 billion and above, ought to submit the CbCR annually to Kenya Revenue Authority (KRA) in the prescribed format by the commissioner within 12 months from the last day of its financial year end. An Ultimate Parent Entity with multiple constituent entities in Kenya shall appoint one of its constituent entity to submit the CbCR to KRA on its behalf.

The CbCR shall contain the following information:

  • Information relating to Identity of each constituent entity, their jurisdiction, natureof principal activities;
  • Group’s aggregate information i.e amount of revenue, profit/loss before tax,income tax paid or accrued, stated capital, accumulated earnings, number of employees, tangible assets
  • Any other information as maybe requested by the Commissioner

Master File and Local File

The Master File & Local File shall be submitted annually to KRA in the prescribed format by the commissioner within 6 months from the last day of its financial year-end.

The Master & Local Files requirements are as summarized below

Master File RequirementsLocal File Requirements
A detailed overview of the group and
the group’s growth engines and a
description of each constituent
entity’s contribution to value creation.
The management structure of the
resident constituent entity.
A description of the supply chain of
the key products and services.
Details and information of the
resident constituent activities
within the multinational enterprise
The group’s research and
development policy and Information
about intangible assets and the group
intercompany agreements associated
with them.
International transactions
concluded by the resident
constituent entity and business
strategies, including structuring,
description of the material-
controlled transactions.
File within 6 months from financial
year end
File within 6 months from financial
Tax rulings made in respect of the
Any other information as maybe
requested by the Commissioner.
Any other information as maybe
requested by the Commissioner.
Summary of Master File & Local File Requirements


In Kenya, non-compliance of the CbCR, Master File and Local File reporting and filing provisions shall be subject to a fine not exceeding Kshs 1 million or a prison term not exceeding three years, or both upon conviction.


Three-tier reporting main objective is to eliminate information asymmetry of MNEs in regard to their tax compliance status with local and other tax jurisdictions. Multinational entities carrying out business in Kenya ought to evaluate their financial activities for the year ending 2022 and subsequent periods to ascertain their compliance status with the three-tier reporting provisions.
Implementation of the three-tier reporting provisions imposes an additional compliance burden to MNEs in Kenya. CbCR should be reviewed in conjunction with Transfer Pricing Policies prior to

Read also The Impact of Tripling of Capital Gains Tax in Kenya

Leave a comment

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Audit and Accounting Firm in Kenya

Get In Touch
close slider
1 Step 1
Full Names
Phone Number
Messagemore details
0 /
FormCraft - WordPress form builder