The Minimum Top-Up Tax: How the Global 15 Percent Floor Reaches Kenya
Large multinational groups now face a minimum effective tax rate. We explain who is caught and what to prepare.
By Mdawida LLP Tax Team
Key takeaways
- The floor targets groups above 750 million euros in turnover.
- A top up applies where the local effective rate falls below 15 percent.
- Reliable jurisdiction level data is the practical bottleneck.
The international project to set a floor under corporate tax has arrived in East Africa. Kenya introduced a minimum top up tax aimed at members of large multinational groups, following the global model that targets groups with consolidated annual turnover above 750 million euros.
Who is in scope
The measure is designed for the largest groups, not for local SMEs. If a Kenyan company belongs to a group that crosses the international turnover threshold, and the group's effective tax rate in Kenya falls below 15 percent, a top up can be charged to bring it up to the floor.
This most often affects subsidiaries and permanent establishments of global businesses that benefited from incentives or allowances which pushed their local effective rate below the minimum.
What to prepare
The starting point is data. Groups need reliable figures for covered taxes and qualifying income on a jurisdiction by jurisdiction basis, which is a heavier reporting exercise than a single company return. The country by country reporting framework already in force gives a useful base to build from.
We advise affected groups to run the effective rate calculation early, model the potential top up, and agree with the parent who files what and where. The worst outcome is discovering a liability during an audit, with no supporting computation on hand.
This article is general guidance, not specific professional advice. Tax law and reporting standards change, and your situation is unique. Speak with us before acting on anything here.
