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KENYA: Tax Authorities Introduce New Reporting Requirements for Financial Institutions

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Nairobi, Kenya - The Kenyan Revenue Authority (KRA) has introduced new reporting requirements for financial institutions operating in the country to ensure compliance with the Common Reporting Standard (CRS).

New Requirements

According to a recent gazette notice, financial institutions are now required to:

  • Obtain and report Tax Identification Numbers (TINs) or dates of birth for customers who do not have such information.
  • Report TINs by the end of the second calendar year following the reporting period.

Purpose

The new requirements aim to enhance transparency and prevent tax evasion globally. Financial institutions, also known as Reportable Financial Institutions (RFIs), are mandated to:

  • Establish due diligence procedures to identify reportable accounts.
  • Report the required information annually.

Compliance Requirements

RFIs must maintain records of their due diligence procedures and relevant documents for at least six years. They are also required to:

  • Implement compliance procedures, including:
    • Developing a compliance plan
    • Conducting due diligence
    • Training staff
    • Maintaining records

Account holders are now required to:

  • Provide accurate information to their financial institutions when opening new accounts or updating existing ones.
  • Consent to the exchange of financial information with the KRA and other countries where they hold assets.

Consequences of Non-Compliance

Failure to comply with the CRS Regulations may result in penalties and fines for both financial institutions and account holders.

Key Takeaways

  • RFIs are required to obtain TINs or dates of birth for customers who do not have such information.
  • The TINs must be reported by the end of the second calendar year following the reporting period.
  • RFIs must establish due diligence procedures to identify reportable accounts and report the required information annually.
  • Account holders must provide accurate information to their financial institutions and consent to the exchange of financial information with the KRA and other countries.

Sources

  • Kenya Gazette Notice
  • CRS Regulations
  • Kenyan Revenue Authority