Kenya Minimum Top-Up Tax Regulations 2025: What Multinational Groups Need to Know
Kenya Minimum Top-Up Tax Regulations 2025: What Multinational Groups Need to Know
The Income Tax (Minimum Top-Up Tax) Regulations, 2025 mark a significant shift in Kenya’s international tax landscape. Issued by the Kenya Revenue Authority (KRA), the regulations operationalise the Minimum Top-Up Tax under Section 12G of the Income Tax Act and align Kenya with the OECD’s Global Anti-Base Erosion (GloBE) Rules.
Also Read: Kenya’s Minimum Top-Up Tax Explained: Impact on Multinational Enterprises & Compliance Requirements
The new framework is designed to ensure that large multinational enterprises (MNEs) pay a minimum effective tax rate of 15% on income earned in Kenya, limiting profit shifting and aggressive tax planning.
This ensures taxation reflects real economic activity rather than profit allocation strategies.
BDO East Africa supports multinational businesses across the region with expert guidance on Minimum Top-Up Tax, including exposure assessments, compliance support, and strategic advisory services.
Download the Full BDO Analysis
Access our in-depth publication on Kenya’s Minimum Top-Up Tax Regulations 2025 and understand how the new rules may impact your business.
Also Read: Kenya’s Minimum Top-Up Tax Explained: Impact on Multinational Enterprises & Compliance Requirements
The new framework is designed to ensure that large multinational enterprises (MNEs) pay a minimum effective tax rate of 15% on income earned in Kenya, limiting profit shifting and aggressive tax planning.
Who Is Affected by the Regulations?
The Minimum Top-Up Tax applies to entities that are part of multinational enterprise groups with consolidated annual revenues of EUR 750 million or more. Unlike Country-by-Country Reporting, the revenue threshold is assessed using a four-year test, requiring the threshold to be met in at least two of the preceding four years.How the Minimum Top-Up Tax Works
Once an entity is determined to be in scope, it must calculate its Effective Tax Rate. Where the ETR is below 15%, a top-up tax is charged on excess profits after applying substance-based income exclusions related to employee costs and tangible assets.This ensures taxation reflects real economic activity rather than profit allocation strategies.
Key Compliance Timelines
Multinational groups subject to the regulations must observe strict compliance deadlines, including:- Notification to KRA within 60 days of the regulations coming into force and annually thereafter
- Payment of Minimum Top-Up Tax by the fourth month following the end of the financial year
- Filing of the Top-Up Tax Return by the sixth month after the financial year end
- Submission of the GloBE Information Return (GIR) within prescribed timelines
What Businesses Should Do Now
Given the technical complexity of the Minimum Top-Up Tax Regulations and the extensive data requirements, affected multinational groups should act early. Impact assessments, tax modelling, and implementation planning are essential to ensure compliance and minimise tax and reporting risks.BDO East Africa supports multinational businesses across the region with expert guidance on Minimum Top-Up Tax, including exposure assessments, compliance support, and strategic advisory services.
Download the Full BDO Analysis
Access our in-depth publication on Kenya’s Minimum Top-Up Tax Regulations 2025 and understand how the new rules may impact your business.
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