Kenya Revenue Authority (KRA) Commissioner General, John Njiraini said Nairobi has signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, joining the league of 93 global nations united to address the economic vices.
“At the end of the day, we do not see that there is any significant difference between straight tax evasion and abusive tax avoidance, which works to abnormally lower tax exposure,” Njiraini said in a statement issued in Nairobi.
Foreign firms have for years been accused of using tax avoidance schemes, including registering subsidiaries in offshore tax havens and using them to minimise payments in another jurisdiction.
Njiraini said the signing of the crucial agreement last week by the Kenyan Ambassador to France, Salma Ahmed, in the presence of the Organisation for Economic Co-Operation and Development Deputy Secretary General, Douglas Frantz, makes Kenya the 94th jurisdiction to join the most powerful multilateral instrument against offshore tax evasion and avoidance.
Njiraini confirmed that the Tax Authority is looking forward to the speedy ratification of the agreement. The country, he said, has already made tremendous progress in strengthening local capacity for addressing international tax avoidance.
Such progress, he noted, includes KRA’s recent establishment of a formal structure to address International Tax Avoidance and to support Tax Information Exchange with other signatories of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
Njiraini noted that the recent enactment of Tax Procedures Bill into law, now demonstrates the seriousness with which Kenya takes international tax avoidance.
“The new law imposes stiff penalties for engagement in international tax avoidance schemes. The penalty imposed can be as high as double the tax avoided,” Njiraini said.
Such a stiff penalty, Njiaraini explained, reflects Kenya’s desire to stamp out retrogressive practices, which multinational operators use to avoid paying their fair share of tax.
The Multilateral Convention on Mutual Administrative Assistance in Tax Matters aims to respond to the call by the G20 to align it to the international standard on exchange of information and to open it to all countries, thus ensuring that developing countries could benefit from a more transparent environment. Enditem