Kenya Revenue Authority Commissioner-General John Njiraini (left) explains how the mobile iTax system works to a taxpayer, Fridah Sigilai. Kenya plans to sign an international convention that curbs tax evasion. PHOTO | DIANA NGILA |
What you need to know:
The government said the decision to sign the Organisation for Economic Co-operation and Development (OECD)-Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters is aimed at promoting transparency in tax matters.
The agreement is the most comprehensive multilateral instrument available for all forms of co-operation to tackle tax evasion and avoidance.
Kenya has joined a continental initiative designed to create awareness among African states on the benefits of the current international co-operation on the exchange of information that would help governments to collect revenue domestically.
Kenya plans to pursue individuals who use offshore companies to evade taxes and commit other economic crimes, after the government announced it will endorse an international convention that targets such offenders.
The government said the decision to sign the Organisation for Economic Co-operation and Development (OECD)-Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters is aimed at promoting transparency in tax matters.
The announcement was made at the recent 7th meeting of the Global Forum on Transparency and Exchange of Information for Purposes held in Berlin.
The meeting sanctioned the inclusion in the terms of reference of a requirement for tax authorities to maintain beneficial ownership information.
Kenya Revenue Authority Commissioner-General John Njiraini was among the officials who represented government in the meeting.
Keeping records
“The convention facilitates international co-operation for a better operation of national tax laws, while respecting the fundamental rights of taxpayers,” Mr Njiraini said.
Keeping records of who holds beneficial interest would lift the veil on shadowy figures behind cross-owned companies that abet tax evasion and illicit activities like drug and human trafficking.
A statement from the KRA said Finance Cabinet Secretary Henry Rotich has pledged to sign the convention.
The Convention will not only make it possible to reveal the names of tax evaders, but also make it easier for the government to pursue them within and outside the country.
The agreement is the most comprehensive multilateral instrument available for all forms of co-operation to tackle tax evasion and avoidance.
Exchange of information
Mr Njiraini said Kenya has joined a continental initiative designed to create awareness among African states on the benefits of the current international co-operation on the exchange of information that would help governments to collect revenue domestically.
Kenya has in the past found it difficult to pursue offshore companies accused of involvement in questionable deals. In addition, getting information on the real owners of some holding companies doing business in the country has been difficult.
A case in point that caused controversy a few years ago is the ownership of Mobitelea Ventures, a company that previously owned 12.5 per cent of Vodafone Kenya Ltd, a 40 per cent shareholder of Kenya’s largest mobile company Safaricom.
In 2007, an investigation by a parliamentary committee failed to establish whether the Guernsey registered company’s owners included local politicians who may have used their influence to facilitate Vodafone’s original $20 million investment in Safaricom in 2000.
At the time, Vodafone refused a formal request from the parliamentary committee to reveal who owned Mobitelea, insisting that the company was its chosen partner in Kenya.
