Member Article

AFRICA TAX IN BRIEF

KENYA: Chinese companies investigated by Revenue Authorities

Local media reports of 30 May 2014 announce that the Kenya Revenue Authority (KRA) is investigating a number of Chinese companies suspected of evading tax.

KRA Commissioner General John Njiraini said it is suspected that some Chinese-owned businesses are either under- or mis-declaring cargo. Njiraini indicated that a number of cases involving such malpractices are already under investigation and that punitive penalties, including criminal prosecution, would be imposed.

Chinese businesses play a significant role in the Kenyan economy, including the public infrastructure, construction, real estate, manufacturing, machinery and equipment supply and telecommunications industries.  Official data from KRA’s shows imports from China grew by 25 per cent over the last three years, reaching a total of Sh165.3 billion in the 2012/13 financial year or the equivalent of 11.6 per cent of total imports.

TANZANIA: Transfer Pricing Regulations introduced

The Income Tax (Transfer Pricing) Regulations, 2014 were issued by the Tanzanian Government in May, effective from 7 February 2014. The Regulations provide practical guidance regarding the application of the anti-avoidance provisions contained in article 33 of the Income Tax Act 2004. The Regulations stipulate that transfer pricing documentation should be in place at the time of the filing of the annual income tax return and allow for Advance Pricing Arrangements to be entered into for a period limited to five years.

The transfer pricing methods adopted by the Regulations follow those set out in the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (the OECD Guidelines). The Regulations recognise both the OECD Guidelines and UN Transfer Pricing Manual for Developing Countries as sources of further guidance.

 For more information, please contact:

Celia Becker

executive tax

+27 82 886 8744

[email protected]