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What the Finance Act 2025 means for Kenyan businesses and their corporate structures
Allan Kimtai SC
·
June 26, 2026
The Finance Act 2025, signed into law on 30 June 2025, introduces several significant changes to Kenya's tax landscape that directly affect corporate structures and cross-border transactions.
Key changes include:
1. Digital Services Tax expansion — The DST now applies to a broader range of digital services, including SaaS platforms serving Kenyan customers. Companies must register for DST if their annual turnover from Kenyan users exceeds KES 5 million.
2. Dividend withholding tax — The withholding tax rate on dividends paid to non-resident shareholders has increased from 15% to 20%, with treaty relief available for qualifying jurisdictions.
3. Transfer pricing documentation — Companies with related-party transactions exceeding KES 1 billion annually must now prepare contemporaneous transfer pricing documentation, up from the previous threshold of KES 100 million.
4. Minimum tax modifications — The controversial minimum tax provisions have been restructured to apply only to companies that have declared losses for three consecutive years.
Businesses should review their corporate structures and intercompany arrangements in light of these changes. Our corporate team is available to assist with compliance reviews and restructuring advice.
Key changes include:
1. Digital Services Tax expansion — The DST now applies to a broader range of digital services, including SaaS platforms serving Kenyan customers. Companies must register for DST if their annual turnover from Kenyan users exceeds KES 5 million.
2. Dividend withholding tax — The withholding tax rate on dividends paid to non-resident shareholders has increased from 15% to 20%, with treaty relief available for qualifying jurisdictions.
3. Transfer pricing documentation — Companies with related-party transactions exceeding KES 1 billion annually must now prepare contemporaneous transfer pricing documentation, up from the previous threshold of KES 100 million.
4. Minimum tax modifications — The controversial minimum tax provisions have been restructured to apply only to companies that have declared losses for three consecutive years.
Businesses should review their corporate structures and intercompany arrangements in light of these changes. Our corporate team is available to assist with compliance reviews and restructuring advice.
Finance Act
Corporate Tax
Cross-Border
Kenya