Kenya Publishes Common Reporting Standard Regulations 2023

• Law Firm: Anjarwalla & Khanna
• Subject Matter: Tax, Tax Authorities
• Author: Mr Daniel Ngumy, Kenneth Njuguna and James Karanja
• Published date: 10 March 2023

The Cabinet Secretary for the National Treasury & Planning recently published the Common Reporting Standards Regulations (the Regulations). Common Reporting Standards (CRS) refer to reporting and due diligence international standards for the automatic exchange of financial account information prescribed by the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes (Global Forum).

The Regulations were issued to give effect to Section 6B of the Tax Procedures Act (introduced by the Finance Act 2021), and are intended to provide designated financial institutions with the due diligence procedures and record-keeping requirements required to ensure Kenya is able to meet the international standards for automatic exchange of information with other jurisdictions.

The Regulations provide for the retrospective application from 1 January 2023 and are part of Kenya's ongoing efforts to exploit global tax transparency instruments to mitigate against incidences of tax avoidance and evasion on an international scale by Kenyan residents.

Since Kenya joined the Global Forum in 2011 the government has taken steps to comply with international standards on the exchange of information in order to acquire the legal capacity to exchange information with other jurisdictions for tax purposes. A significant milestone was the signing of the Convention on Mutual Administrative Assistance in Tax Matters (the Convention) on 8 February 2016 when Kenya became the 12th African country to sign the Convention and the 94th jurisdiction to join it (a total of 141 countries have since signed the Convention). Kenya deposited the instrument of ratification of the Convention on 22 July 2020 which entered into force in Kenya on 1 November 2020. Now that the CRS Regulations are in force, Kenya will be expected to sign and activate the Common Reporting Standards Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (the MCAA). The MCAA is the multilateral framework that enables tax authorities of signatory jurisdictions to automatically exchange financial information on an annual basis.

A. Brief Summary of the Provisions of the Regulations
The Regulations prescribe the financial institutions covered, the types of financial accounts to be reported as well as the due diligence procedures that the reporting financial institutions should undertake to maintain the reportable financial information.

i. Financial Institution
This...