Fie Insights

Read our latest insights & news from Africa
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The establishment of suitable Intercompany Agreements (ICAs) is a continuous initiative rather than a singular undertaking. This is attributable to the dynamic nature of the group’s composition, subject to alterations resulting from acquisitions, organic growth, or organizational reconfiguration. Additionally, the group must periodically revise its Transfer Pricing (TP) compliance strategies due to modifications in tax...

Income Tax Return Deduction Refund Concept

Intercompany agreements, or ICAs, are legal contracts entered into between businesses with similar interests. These agreements lay the groundwork for the legal structure that governs the provision of services, products, intangible assets, and financial assistance inside a corporate group. Management services, administrative and other back-office services (e.g., finance, tax, legal, and HR services), marketing services,...

Addis

Capital markets play a critical role in efficient and arguably effective allocation of scarce financial resources to competing investment opportunities in a given economy. They also provide an alternative source of capital for the private and public sectors in countries where they are well established. Capital markets complement the traditional sources of capital for businesses...

4IR

The progression from the Agrarian Revolution to the Fourth Industrial Revolution represents pivotal milestones in human history, marked by profound shifts in technology, economics, and society. To provide a comprehensive understanding of these transformative periods, we offer the following summary: Agrarian Revolution (circa 10,000 BCE): The Agrarian Revolution, also known as the Neolithic Revolution, marked...

Nairobi

Tax Policy Changes Value Added Tax Firstly, there is a proposal to review the VAT threshold, aiming to optimize operational efficiency within the VAT system.  Reviewing the VAT threshold can enhance efficiency by streamlining the administration of VAT, potentially reducing compliance burdens for small businesses. Secondly, a comprehensive assessment of exempt and zero-rated supplies is...

Climate change (2)

The Dynamics of Protectionism Trade has long been considered a cornerstone of economic prosperity, fostering growth and development in societies across the globe. However, the concept of protectionism, which involves implementing trade barriers to shield domestic industries from foreign competition, has also played a significant role in shaping economic policies. Protectionism, including tariffs, import quotas,...

taxes

The Kenyan taxation framework operates on a self-assessment basis, susceptible to manipulation, filing errors, income understatement, and expense overstatement, among other vulnerabilities. To comprehend the foundation of this system, it is essential to explore the underlying legal framework. Under the Judicature Act (CAP 8), the High Court, Court of Appeal, and subordinate courts are mandated...

cooking oil

The African Development Bank (AfDB) estimates that Africa needs approximately $45 billion annually to transform its agriculture sector. This estimate includes investments in infrastructure, technology, research and development, and capacity building. Cumulatively, the amount of investment needed to finance food systems in Africa by 2030 is in the north of USD 315 billion. This huge...

grocery (2)

The Feed Africa Strategy for Agriculture Transformation in Africa 2016 – 2025 is a comprehensive and ambitious initiative launched by the African Development Bank (AfDB) to drive sustainable agricultural development across the African continent. With the goal of eradicating hunger, reducing poverty, and achieving food security, the strategy focuses on transforming Africa’s agriculture sector into...

FS

In June 2014, during the 23rd African Union Summit held in Malabo, Equatorial Guinea, African leaders came together and made a commitment to accelerate agricultural growth and transformation on the continent. The leaders set specific targets to be achieved by 2025, which are known as the “Malabo Commitments.” These commitments are aimed at promoting food...

Tax haven

Introduction According to a guide developed by the International Institute for Sustainable Development (IISD), the Pillar Two Global Anti-Base Erosion (GloBE) minimum tax proposal will have an impact on numerous countries, regardless of whether they take action within their own borders. The GloBE initiative establishes a reservoir of potential tax revenues from the incomes of...

Transfer pricing

Energy and Resource (ER) Transfer Pricing Considerations Trading Hub: In the present BEPS landscape, the focal point regarding trading hubs revolves around a crucial transfer pricing (TP) consideration. It involves ensuring a harmonious correlation between two key factors: Strategic Decision-Making and Risk Control: This entails verifying that the geographic location where pivotal decision-makers exert authority...

Roof

The roofing material market in Kenya has undergone significant transformations over the past decade. The usage of iron sheets as the primary roofing material by households has steadily risen from 73.2% in 2009 to 80.3% in 2019, according to Kenya National Bureau of Statistics’ (KNBS). Conversely, the utilization of grass for roofing has declined from...

The Rising Tide of E-Mobility in Kenya’s Two & Three-Wheeler Market

The transportation sector in many low and middle-income countries is witnessing rapid growth in two and three wheelers. While Asia currently dominates the global motorcycle fleet, African countries are experiencing some of the highest growth rates for motorcycles worldwide. Presently, there are approximately 270 million motorcycles on the roads, with annual motorcycle sales reaching around...

Dissecting High Level Trends in the Motorcycle Industry in Kenya

The motorbike industry in Kenya has experienced significant growth and transformation in recent years. Motorcycles have gained popularity as a means of transportation for both goods and people, primarily due to their ability to navigate through traffic congestion and reach destinations quickly. This trend is particularly evident in urban areas where traffic congestion is a...

ESG Reporting & Sustainable Investing: The Role of Exchanges & Regulators

ESG reporting has gained significant importance in recent years as organizations recognize the need to integrate sustainability and responsible practices into their operations. It enables companies to be more transparent about the risks and opportunities they face. The increasing significance of sustainability reports is backed by the demand from investors and other stakeholders for companies...

Public-private partnerships (PPPs) have become a widely utilized form of infrastructure development across numerous nations globally. By combining the capabilities of public and private entities, efficient and sustainable infrastructure projects can be achieved. One potential issue that could potentially impede the success of these PPP projects is transfer pricing. Transfer pricing is a method of...

Crypto

In the advent of globalization, new emerging business models have developed in the last 10 years with the recent developments heavily experienced in the financial products and intermediaries such as Decentralized Finance (DeFi). At the same time jurisdictions globally are concerned about the potential growth of digital economy and the risks associated with reduced transparency...

Investment

The need for innovative and bold solutions to implement new technologies on a large scale is evident. Green Banks have been developed with this purpose in mind, raising and blending capital to finance local climate infrastructure while driving a surge in private investment. These institutions can play a significant role in mobilizing finance to support...

Investment

Countries must invest in and build clean and resilient infrastructure for the world to address the climate crisis and develop equitably. National goals to transform energy use and deploy low-carbon solutions across sectors require investment in projects at the local level. Governments are struggling to source and subsequently deploy sufficient levels of funding for high-priority,...

Tax law

Background The Appellant is a registered taxpayer whose principal business is grading and packaging of flowers for export. It is located in Naivasha Kenya. The Respondent is a principal officer of Kenya Revenue Authority, Kenya Revenue Authority is an agency established under the Kenya Revenue Authority Act for the collection of Government revenue and related...

taxation

In our previous thought leadership, we explored why developing economies in Africa should tap into private sector and sovereign funds to finance their Nationally Determined Contributions (NDCs). Development of climate resilient infrastructure will play a key role in climate risks mitigation and adaptation going into the future; hence there is a need to widen the...

Bank

The LIBOR rate was believed to be a true reflection of the markets’ cost of borrowing funds independent of government interference. However, investigations by regulators and journalists after the financial crisis revealed that LIBOR had been manipulated by the banks themselves and at times from influence of regulators. Banks had an interest in keeping the...

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The Profit Split Method: it logically follows that the residual profits will be allocated to those entities contributing the unique and valuable intangibles and making the crucial strategic decision (entrepreneurs), while entities performing supporting functions will be allocated a small and stable (routine) remuneration. The aim is aligning profits with value contribution. It is useful...

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Transactional Profit Methods The Transactional Net Margin Method (TNMM): Net Margin data derived from uncontrolled transactions. TNMM examines the net profit relative to an appropriate base like costs (Net Profit return to Costs), sales (Net Profit return to Sales), or assets (Net Profit Return to Assets). It operates like a cost plus or resale minus,...

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The Cost-Plus Method (CPM): Gross profit margin data expressed as a mark-up of production costs incurred in uncontrolled transactions. OECD GL paragraph 2.45 states that cost plus method begins with the costs incurred by the supplier of property (or services) in a controlled transaction for property transferred or services provided to an associated purchaser. An...

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Most countries, the OECD and the United Nations transfer pricing guidelines have all built in a degree of flexibility into their approaches, allowing other methods to be used in specific cases, provided that they approximate an arm’s length result and are acceptable to all the parties involved – that is acceptable to the tax administration,...

ESG

Materiality and double materiality are two critical concepts in business sustainability reporting, and they play a vital role in ensuring the effectiveness and credibility of sustainability reporting. These concepts determine which sustainability topics are relevant to a business and its stakeholders and the level of detail that should be reported about them. Materiality refers to...

Cross border trade

Income tax treaties begin with the recitation that they are entered into between countries for the purposes of avoiding double taxation of international income flows, and the prevention of fiscal evasion with respect to taxes on income and capital gains. Permanent Establishment (PE) is a key concept in international corporate tax planning, used by tax...

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Key issues and concerns remained at the end of the previous trade negotiation round. Developing countries felt that more needed to be done to strengthen the multilateral trading system. The prevailing system then for example, permitted developed countries to impose temporary trade restrictions to protect local industries and hence negotiations on safeguards were to continue....

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The global economy is growing rapidly coupled with integration of national economies and markets. This growth has created an opportunity for profit shifting by Multinationals from high-tax jurisdictions to low-tax jurisdictions through treaty shopping; which has been cited by OECD Inclusive framework as one of the major sources of BEPS concerns. Against that background, OECD...

omnichannel

The omnichannel way is the only way Many digital and traditional store companies employ un-optimized marketing strategies. These strategies usually deploy several marketing campaigns geared towards customer acquisition and retention. However, many of these campaigns are disjoint in the customer’s journey, from awareness to repeat purchases. In recent years, we have noticed both parties (digital...

carbon pricing

Greenhouse gas (GHG) emissions pose several potential economic and environmental risks to property, human health, agricultural productivity, and the ecosystem. Carbon pricing transfers the cost of the damage caused by GHG emissions back to those responsible. Instead of dictating who should reduce emissions where and how, a carbon price sends an economic signal to emitters,...

Banks

Over the past decade, governments across Africa have been working towards transitioning their countries into developed economic status. This development race is characterized by increased investment in transport and energy infrastructure; as well as other public utilities such as hospitals, schools, waste management systems, and public recreation facilities. However, funding for these mega projects across...

Port

Many African seaports have suffered from underdevelopment, inadequate port infrastructure, congestion, and inefficiency. This has necessitated the development of a proper mechanism to help alleviate the challenges; resulting in the development of the dry port concept. Dry ports, are a new concept in Africa, having originated in Europe and North America. Dry ports are intermodal...

Trade

Africa’s economy is highly dependent on the international markets for both exports and imports. COVID-19 pandemic highlighted the continent’s extreme vulnerability to disruptions of international supply chains; as 53% of its imports originated from nations that were heavily impacted by the pandemic. With over 60% of the nation’s being importers of essential goods, global trade...

Tokyo

The Kennedy Round of Negotiations The sixth round of negotiations under GATT was called the Kennedy round named after former United States President John Kennedy; and took place between 1963 to 1967 in Geneva. 62 countries participated in this round, including seven members of the other European trade bloc, the European Free Trade Association. This...

Supply chain

Africa has developed a 2050 Marine Integrated Strategy, which serves as a road map for addressing Africa’s maritime challenges for long-term development and competitiveness. The strategy seeks to increase wealth creation from Africa’s oceans, seas, and inland waterways; by developing a thriving maritime economy and fully realizing the potential of marine-based activities in an environmentally...

agreements

For countries to arrive at a consensus on trade agreements they have to sit down at the bilateral or multilateral level first. Initially, rounds of trade negotiations that were done under General Agreement on Tariffs and Trade (GATT) involved the member countries exchanging a list of requests and offers on products that were of interest...

Roads

Africa’s infrastructure development remains severely deficient, with an estimated need for infrastructure investment of more than USD 100 billion. Like the region’s internet development since the early 2000s, the rest of the sectors particularly transportation infrastructure; must be well established to reap the enormous benefits of connectivity. A good internet connectivity ensures faster and more...

Supermarket

Once a product has reached its last mile of distribution, most companies will not invest their resources in tracking the performance of that product. Concerns of incomplete orders, product mismatch or delayed delivery time have to be taken up by customers themselves to the company’s customer care department. Yet in the event that any of...

taxation

The world’s tax treaties are based on precedents found in an OECD model tax convention or a UN model tax convention. Both models divide taxing rights on cross-border investment and business activities. The OECD model shifts taxing rights to capital exporting (residence) treaty partners while the UN treaty allows capital importing countries (Source country) to...

MERGERS

To promote and enforce fair trade practices between countries, the World Trade Organization (WTO) headquartered in Geneva, Switzerland was formed in 1995. Currently, WTO has 164 member states with 25 other countries negotiating for membership. The institution which currently has oversight on 98% of global trade; is the successor of the General Agreement on Tariffs...

CLimate finance

To combat climate change, trillions of dollars in climate investment must be leveraged; as well as climate change transparency and accountability in order to monitor and evaluate the effectiveness of climate finance. Transparency and accountability are pivotal due to the fundamental imbalance of power within and across nations. Improvement of both values is required to empower...

counterfeit

Counterfeiting is a billion-dollar industry that is widespread globally. Each year, the industry generates an estimated USD 250 billion in revenue. According to the Anti-counterfeit Agency (ACA) 1 in every 5 products retailing in the market in Kenya is a counterfeit; with over 4 million Kenyans consuming the counterfeit products. In 2017, counterfeits rivaled top...

Roads

Infrastructure development is a key driver of progress in Africa, as well as a critical enabler of productivity and long-term economic growth. Closing the infrastructure financing gap estimated at $100 billion per year is critical for the continent’s economic development, people’s quality of life, poverty eradication, and business expansion. Africa’s infrastructure deficit can be divided...

Supply chain

Supply chain management (SCM) refers to all the steps and processes involved in the lifecycle of a product, right from its conception, creation, distribution, up until its consumption. At each stage of the life cycle, supply chain managers are tasked with maintaining efficiencies in the production processes and ensuring timely deliveries to the consumers. Over...

grocery (2)

The global food and grocery industry has experienced tremendous disruption, thanks to the Covid-19 pandemic. As highlighted in our previous article on “Digital transformation in the food and grocery delivery industry in Kenya”, this disruption was experienced in an array of industries leading to the “tech-celeration” of digital innovations. Five years of technological advances were...

Embeded finance

An increase in access and adoption of internet as well as recent events such as the Covid-19 pandemic that limited people’s movement have catalyzed a rapid transition into online banking across Africa.  Today it is possible to get a loan from a bank without ever seeing the inside of its halls. Leveraging on this market-driven...

Banks

Independently, governance, risk and compliance (GRC) have always been of concern to businesses especially those in the financial services who face numerous regulations. GRC is an approach to management that looks at the 3 principles holistically throughout the entire organization. Under GRC all three components have to be implemented collectively, as opposed to having just...

GROCERY

Globally, markets are starting to embrace online grocery shopping, even though the rate of adoption is slow. Multiple retailers are expanding their offerings into online grocery shopping. In Europe, some of the retailers are Tesco and Ahold. In the US, some examples include FreshDirect and Amazon Fresh while in Kenya, some of the retailers offering...

Consumer

Despite Africa’s economic and political volatility, geographical complexities, and infrastructural gaps, global business interest in the continent is continuously blooming. Among the key drivers of this interest are a population that is fast growing & urbanizing, increasing digital & mobile access, innovations and large reservoirs of key natural resources (arable land and minerals). In the...

Island

The climate agenda has brought the human race to the realization that climate change is borderless and no one can escape the climate crisis. However, the true realization is that, on a global scale, the climate consequences are not evenly felt, with some being more adversely affected than others. The least contributors to carbon emission...

Data

According to OECD model for tax convention, intangibles are intended to address things that are not physical assets or financial assets; but which are capable of being owned or controlled for use in commercial activities. In addition, the use or transfer of these intangible assets would be compensated had it occurred in a transaction between...

China

China has become Africa’s largest trade partner with over 10,000 Chinese owned firms operating within the continent; with business transactions valued at more than USD 2 trillion. Through trade, China’s economic growth has directly impacted the economies of developing countries. Time and again, Africa has proven to be vulnerable to the competitive threat that China...