Kenya has tracked down Sh 130 million (US$1.3million) of unaccounted tax arising from trade transactions with its international partners, a global report on Exchange of Information for Tax Purposes shows.
The trailing of a tax evasion racket, follows signing of the Yaoundé Declaration by Kenya in November 2019, an indication Kenya has begun gaining from efforts to improving financial secrecy with its trading partners.
“At KRA, we are encouraged by the positive and aptly captured outcomes which are as a result of the sustained application of international cooperation and exchange of information tools to tackle illicit financial flows,” KRA Commissioner General Githii Mburu said.
Tax Transparency in Africa 2020 Report, that has just been published acknowledges that significant progress has been made in fighting tax evasion and illicit financial flows in Africa.
“For the first time, Kenya has identified additional taxes as a direct consequence of EOI. EOI has a huge potential for Kenya, and it has been putting a lot of effort to build up an effective EOI programme over the past two years. One concrete result is the sending of 19 EOI requests with already USD 1.3 million identified,”read the report in part.
With the ratification of the Multilateral Convention late in 2019, it is expected that Kenya will be sending more requests as the entry into force of the Convention will open avenues for exchanges with over 135 jurisdictions.
According to the report, upscaling of Exchange of Information (EOI) treaties signing in the continent has seen eight African countries secure US$ 189 million as additional tax revenues between 2014 and 2019 due from international sources.
This is mainly due to the growing number of countries joining the Convention on Mutual Administrative Assistance in Tax Matters.
“Countries that are destinations for these flows, including financial centres in Europe, Asia, America, the Caribbean and Pacific, now participate in the global effort to improve tax transparency and EOI for tax purposes thus helping to develop countries to prevent the outflows and identify the people involved,” said Mburu.
The report however echoes sentiments of another latest Financial Secrecy report by Tax Justice Network that calls for further efforts to support domestic revenue mobilisation.
“Kenya’s beneficial ownership transparency and anti-money laundering regime require significant strengthening,” said TJN in the Financial Secrecy Index 2020.
The latest TJNA financial secrecy index shows Kenya’s contribution to global financial secrecy worsened, taking its ranking up from 27th on the 2018 index to 24th in 2020.
Kenya now has the second highest secrecy score in Africa.
Tax Transparency in Africa 2020 is a joint publication of the Organisation for Economic Co-operation and Development (OECD) Global Forum on Transparency and Exchange of information for Tax Purposes, the African Union Commission and the African Tax Administration Forum.
The report is part of the Africa Initiative, which is an international programme aimed at unlocking the potential for tax transparency and exchange of information in Africa.