Have you ever wondered what Country-by-Country (CbC) Reporting really means? Let's make it simple.
Imagine a parent with five children studying in five different schools. Each school wants to know how many children the parent has, how much school fees is being paid, and which child goes to which school. Instead of telling each school a different story, the parent prepares one complete report showing all five children, where they study, and how the school fees are distributed.
That is exactly what Country-by-Country Reporting is.
Now replace the parent with a multinational company, the children with companies in different countries, and the schools with the countries where the company operates.
For example, a multinational company may have businesses in Kenya, Uganda, Tanzania, South Africa, and the United Kingdom. Instead of each country only seeing its own small piece of the business, the multinational prepares one Country-by-Country Report showing the entire group's activities worldwide.
What Information Does the Report Contain?
- Revenue earned
- Profit made
- Tax paid
- Number of employees
- Assets owned
- Companies operating in each country
Why Is This Important?
Tax authorities, including KRA, use this report to determine whether profits are being reported where the actual business activities take place.
For example, if a company has 2,000 employees in Kenya but reports very little profit here, while only three employees in another country are associated with billions in reported profit, that may raise questions about whether profits have been shifted to reduce tax.
Country-by-Country Reporting therefore promotes transparency and helps tax authorities identify potential tax avoidance through profit shifting.
What Changed Under the Finance Bill and Finance Act 2026?
The Finance Bill, 2026 proposed technical amendments to Section 18D to clarify the statutory references relating to the filing of Country-by-Country reports by Ultimate Parent Entities and Constituent Entities.
The Finance Act, 2026 retained these amendments. They are technical corrections intended to align the law with the correct provisions governing Country-by-Country Reporting. They do not introduce a new reporting obligation but simply make the legislation clearer and easier to apply.
When Is the Report Due?
An Ultimate Parent Entity is required to file the Country-by-Country Report within 12 months after the last day of the group's reporting financial year. The Finance Act, 2026 did not change this filing timeline—it clarified the statutory references relating to this existing requirement.
Tax Home Kenya Insight
Country-by-Country Reporting is not about paying more tax—it is about transparency.
It enables tax authorities to see where multinational companies earn their income, where they pay tax, and whether profits are being reported in countries where the real economic activities take place.
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