In a notice issued by the Kenya Revenue Authority (KRA), all taxpayers involved in related party transactions are now required to provide accurate information during the filing process.
A key addition is the inclusion of a specific question on the basic information sheet of the Income Tax Company return.
"Kenya Revenue Authority (KRA) would like to notify taxpayers that the Income Tax - Company Return on the iTax platform has been enhanced to provide for declaration of related party transactions by persons with related parties and whose ascertainment of gains or profits from business is subject to the provisions of Sections 18 or 18A of the Income Tax Act, Cap 470," the notice read.
Taxpayers must respond with a "Yes" or "No" to indicate whether they have related parties outside Kenya or controlled transactions.
To ensure comprehensive reporting, relevant details of these related party transactions should be captured under the newly introduced sheet labeled "B2_Related_party_transaction".
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"When filing their returns, all taxpayers with related party transactions are required to answer, "Yes", to the question, under the basic information sheet of the Income Tax Company return, on whether or not they have related parties outside Kenya or controlled transactions," KRA said.
"The relevant details of the related party transactions should then be captured under sheet "B2_Related_party_transaction."
By requiring taxpayers to disclose their related party transactions, the KRA aims to ensure that businesses operate within the legal framework and pay their fair share of taxes.
Taxpayers are advised to familiarize themselves with the enhanced Income Tax - Company Return filing process, particularly the new requirements concerning related party transactions.
Failure to provide accurate and complete information may lead to penalties or further investigations by the KRA.
