For a long time, the rules on how multinationals are taxed were written without Africa in the room. That is starting to change – and Kenya is right in the middle of it.
Take a familiar example. A multinational tech company earns significant revenue from Kenyan users. It has no office here. It pays no corporate tax here. The profits sit in a low-tax jurisdiction elsewhere, structured in a way that is fully compliant with the current rules. Those rules, however, were never really designed with markets like Kenya in mind. That is the system we have lived with.
The international tax framework – built on bilateral treaties, the Organisation for Economic Co-operation and Development guidance and transfer pricing rules – was largely shaped decades ago. It reflects the priorities of the countries that designed it. In practice, that has meant more taxing rights for where companies are headquartered, and less for where they make their money.
For countries like Kenya, the result has been fairly consistent: limited withholding tax rights under old treaties and constrained ability to tax cross-border payments. In today’s economy, where value can be created in a market without any physical presence, those limitations are becoming harder to defend. That is why the recent developments matter.
In November 2025, global tax negotiations were held in Nairobi – the first time they have taken place in Africa. Kenya did not just host. It played a leading role within the African Group in pushing for a United Nations Framework Convention on International Tax Cooperation.
One of the more consequential positions Kenya has taken is that a new UN framework should take precedence over older bilateral treaties where the two conflict. Many of Kenya’s treaties were signed when the country had far less leverage. Some of them now restrict how much tax Kenya can impose on dividends, interest, royalties and service fees.
Leaving those treaties untouched would effectively lock in those limitations and overriding them is not without consequence. It raises real questions around treaty hierarchy and how conflicts between old agreements and a new multilateral framework would be resolved. For businesses, that kind of transition is rarely neat.
Kenya has also taken a clear position on dispute resolution, preferring mutual agreement procedures over mandatory arbitration. The concern is a practical one. Arbitration tends to favour parties with deeper resources and stronger legal firepower.
So what does this mean for businesses? In the near term, not much changes overnight. But the direction is fairly clear. The real test is execution. If Kenya can push for change globally while improving confidence in its own tax system, it will not just have a seat at the table. It will have a meaningful say in how the rules are written.
Treaty positions that companies have relied on – particularly reduced withholding tax rates – may not hold in the same way going forward. Structures built around those provisions will need a closer look.
The digital economy is also firmly in scope. There is increasing pressure, led in part by countries like Kenya and Nigeria, to recognise market presence as a basis for taxation. For businesses operating across borders without a physical footprint, that is a material shift.
Transfer pricing is unlikely to remain untouched either. The arm’s length principle has always been difficult to apply in markets where comparable data is limited, and even more so where value sits in intangibles that are not easy to price.
That debate is not new, but it is picking up momentum.
There is, however, a separate issue that Kenya will have to confront alongside all this.
A country pushing for fairer global tax rules also needs to maintain credibility at home.
Businesses operating locally are familiar with the friction – assessments issued without much engagement, positions that shift across audits, and objection processes that can take longer than they should. These are not theoretical concerns. They affect real decisions on investment and growth.
Kenya’s position internationally is stronger when its domestic system is seen as predictable and fair. The two go hand in hand.
None of this takes away from what Kenya is trying to do. Pushing for a fairer allocation of taxing rights – particularly in a digital economy – is both necessary and overdue.