Kenya vs. Avic International (November 2024): Transfer Pricing Dispute Over Method Selection

Name: ArmsLength AI
Address: New York, United States
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Borys Ulanenko

CEO of ArmsLength AI

TL;DR - Key Takeaways

The Kenyan tax authority (KRA) successfully argued that Avic's assembly operations added substantial value, making TNMM more appropriate than the Resale Price Method.
The Tribunal upheld a significant Kshs. 424.9 million income adjustment based on the TNMM analysis, increasing Avic's tax liability.
The case establishes key precedent on transfer pricing method selection for entities with manufacturing or assembly activities in Kenya.
The ruling partially favored the taxpayer on procedural issues, enforcing the 5-year statute of limitations and reducing certain secondary adjustments.

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