Transfer pricing management strategies by multinational enterprises within the main investment segment of the Nairobi Securities Exchange

Abstract

The purpose of this study was to analyze the development of transfer pricing, why it is a key concern to both MNEs and revenue authorities and the management strategies put in place by MNEs to cope with TP challenges in emerging markets. The research questions addressed were: (i) What is the impact of transfer pricing on MNEs? (ii) What are the challenges facing MNE’s operating in Kenya in implementing transfer pricing policies? (iii)What transfer pricing management strategies have been put in place by MNEs in Kenya? The research adopted a descriptive research design. The population comprised of 55 MNEs operating in Nairobi, Kenya. The study employed primary methods of data collection. The study recommended that MNEs should improve their efforts in their understanding of what transfer pricing means. In addition, awareness should be to comprehend the effects of transfer prices on the level of inter-company transactions with related non-resident companies. Generally MNEs should comply with the transfer pricing rules in the country. On suggestion for further research, the researcher proposes that future researchers should focus on examining the most appropriate methods for determining transfer pricing and develop on the limited theoretical framework of the topic. Since the sample population size of the distributors was small (n=55) future research can focus on a wider scope of MNEs across East Africa.