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January 27, 2022

Kenya publishes Common Reporting Standards regulations

Executive summary

Kenya’s Cabinet Secretary, National Treasury and Planning published the draft Tax Procedures (Common Reporting Standards) Regulations (CRS Regulations) applicable to financial institutions in December 2021.

The Common Reporting Standards (CRS) were developed by the Organisation for Economic Co-operation and Development (OECD) in July 2014 with the intention of protecting the integrity of tax systems and reducing instances of tax evasion through the sharing of information among jurisdictions on an annual basis. Kenya signed the CRS Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information on 22 July 2020 and adopted the OECD Regulations as drafted.

The CRS Regulations apply to financial institutions that are required to report various types of financial information to the Commissioner. The draft Regulations were published in December 2021 for the public to share their comments by 4 January 2022 but have a commencement date of 1 January 2022. It is anticipated that this anomaly in dates will be rectified upon enactment to prevent common court challenges.

Detailed discussion

The CRS Regulations have been prepared to implement Kenya’s multilateral agreement with OECD and the provisions introduced in the Finance Act, 2021. Therefore, these Regulations are meant to provide guidance on the automatic exchange of tax information for reportable persons in reportable jurisdictions.

The key provisions of the CRS Regulations are highlighted below.

Key definitions

A financial institution includes the following:

  • Custodial institution

  • Depository institution

  • Investment entity

  • A Specified Insurance Company (i.e., an insurance company or the holding company of an insurance company which issues, or is obligated to make payments with respect to, a Cash Value Insurance Contract or an Annuity Contract)

Reportable account refers to a financial account maintained by a reporting financial institution and is held by one or more reportable person or by a passive non-financial entity with one or more controlling persons who happens to be a reportable person.

A reportable jurisdiction refers to a jurisdiction other than the United States or Kenya or a jurisdiction as specified in the second schedule of the CRS Regulations.

A reportable person is a person in a reportable jurisdiction other than:

  • A corporation whose stock is regularly traded on one or more established securities market

  • Any corporation that is related to the above definition

  • A government entity

  • An international organization

  • A central bank

  • A financial institution

Due diligence requirements

Financial institutions will be required to document the due diligence procedures followed in identifying reportable accounts maintained by the institution and ensuring that the information on the reportable account is submitted annually.

This due diligence procedure involves reviewing of all existing accounts so as to identify reportable accounts, determining reportable low and high value accounts, obtaining self-certifications for new and existing accounts, conducting residence tests for low value accounts and identifying instances of inconsistencies in the self-certifications where contrary information exists.

The Regulations also allow financial institutions to use a service provider to conduct due diligence and reporting obligations, however, the ultimate obligation responsibility will still lie with the reporting financial institution.

Reporting obligation

Reporting financial institutions will be required to file with the Commissioner each year and subsequent calendar year, a declaration with the information set out by the CRS Regulations on reportable accounts by 31 May of the year following the year in respect of which the declaration is filed. The return is to be submitted electronically via technology and in a format approved by the Commissioner. Where a reporting financial institution has not identified a reportable account, then a nil return is to be filed.

Record keeping

Reporting financial institutions are to maintain electronic searchable data with fields as set out in the CRS Regulations. This data is to be maintained for the statutory five-year period.


Reporting financial institutions will be required to update their database with information as per the CRS Regulations. This might involve additional investment in the relevant technology, capacity building or outsourcing service providers.

Automatic exchange of tax information will enhance tax transparency while at the same time reducing cross-border tax evasion. Therefore, reportable persons need to ensure accuracy of their tax returns in their tax jurisdictions and disclose their residence status to the financial institutions.


For additional information with respect to this Alert, please contact the following:

Ernst & Young (Kenya), Nairobi

Ernst & Young Société d’Avocats, Pan African Tax – Transfer Pricing Desk, Paris

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

Ernst & Young LLP (United States), Pan African Tax Desk, New York


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