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Kenya Introduces Common Reporting Standards Regulations

Kenya has joined the global trend in implementing Common Reporting Standards (CRS) regulations to combat tax evasion and promote transparency in financial transactions. The CRS regulations, which have been adopted by over 30 jurisdictions worldwide, require financial institutions to collect and report information on financial accounts held by non-resident individuals and entities.

Key Features of the Regulations

The Kenyan CRS regulations require Reporting Financial Institutions (RFIs) to:

  • Collect and verify the tax residence of account holders
  • Determine whether an account is a Reportable Account based on certain thresholds and conditions
  • Obtain self-certification from account holders to determine their tax residence
  • Maintain records of account holder information for at least 10 years

Thresholds and Conditions for Reportable Accounts

Accounts with aggregate balances or values exceeding US$250,000 as at December 31st are considered Reportable Accounts. Additionally, accounts held by entities in a reportable jurisdiction or by individuals who are reportable persons are also treated as Reportable Accounts.

Special Due Diligence Rules

The regulations provide for alternative procedures for financial accounts held by individual beneficiaries, such as those receiving death benefits from insurance contracts.

Residency of Financial Institutions

A financial institution is considered resident in a participating jurisdiction if the jurisdiction can enforce reporting of the financial institution. If an institution is resident in two or more jurisdictions, it shall be subject to the reporting and due diligence obligations of the Participating Jurisdiction in which it maintains the financial account(s).

Market Outlook

The implementation of CRS regulations will have far-reaching implications for the banking, custodial, depository, insurance, and other sectors. Kenya’s adoption of these regulations demonstrates its commitment to transparency and cooperation with international authorities.

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