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Wednesday, February 21, 2024

Kenya Secures US$ 1.3 Million Additional Revenue

Fighting illicit financial flows in Africa intensified

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KENYA.Nairobi: The government of Kenya has welcomed findings in a global report on Exchange of Information for Tax Purposes that now cites Kenya as one of the leading lights currently enjoying the benefits of an international effort to curb illicit financial flows.

Dubbed Tax Transparency in Africa 2020, the reports confirm that following the up-scaling of Exchange of Information (EOI) treaties signing in the continent, eight African countries have secured US$ 189 million as additional tax revenues between 2014 and 2019 from international sources. 

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This, stakeholders argue, is mainly due to the growing number of countries joining the Convention on Mutual Administrative Assistance in Tax Matters.

Despite significant progress having been made in fighting tax evasion and illicit financial flows in Africa, the report recognizes the need to support domestic revenue mobilization.

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Having signed the Yaoundé Declaration in November last year, the Tax Transparency in Africa 2020 publication confirms that Kenya, through its revenue collection agency, the Kenya Revenue Authority (KRA) has managed to identify more than US$ 1.3 million additional taxes arising from its international EOI requests.

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. 

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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.

KRA Commissioner General Githii Mburu said the report had aptly captured the progress in efforts to curb illicit financial flows. This includes enhanced information sharing among the African Union (AU) Member States and the signing of international protocols focused on improving international tax cooperation.

“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,”  said Mburu.

He added, “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.”

The aim of the Africa Initiative is to support the achievement by African countries of the Sustainable Development Goals of domestic resource mobilisation (DRM) and enhance their ability to fight against Illicit Financial Flows (IFFs). 

This is achieved by encouraging engagement and participation in international tax cooperation and by exploiting the tremendous improvements in global tax transparency and exchange of tax information, which have occurred in the last few years.

The report outlines the progress made by 32 AU Member States, members of the Africa Initiative and three non-members. It further shows the progress achieved on the two cornerstones of the initiative which are; raising political awareness and commitment and developing capacities in tax transparency and exchange of information (EOI).

Tax transparency and EOI have a crucial role to play in helping African governments stem illicit financial flows and increase domestic revenue mobilisation.

For the first time, says the report, Kenya has identified additional taxes as a direct consequence of EOI, one concrete result being sending of 19 EOI requests with already US$ 1.3 million identified. 

With the ratification of the Multilateral Convention late in 2019, which opened avenues for exchange of tax information with over 135 jurisdictions, it is expected that Kenya will be sending more requests .

Between 2014 and 2019, a group of eight African countries have identified US$ 189 million. This is relevant for African countries as the expenditure needs are significant in the continent.”

“The ongoing COVID-19 crisis will completely end any tolerance towards all forms of tax evasion,” said Maria José Garde, Chair of the Global Forum on Transparency and Exchange of Information for Tax Purposes.

Three additional African countries, including Kenya, joined the Global Forum in the last year and six added their weight to the Yaoundé Declaration

Active partnerships with the African Union Commission, the African Development Bank, the African Tax Administration Forum, the Cercle de Réflexion et d’Échange des Dirigeants des Administrations Fiscales, the West African Tax Administration Forum and the World Bank Group significantly contributed to the fight against IFFs and have helped raise political advocacy across the continent.

Prof Victor Harison, Commissioner for Economic Affairs of the African Union Commission, called on “all Member States to participate in the international tax cooperation by implementing fiscal transparency strategies that fight against illicit financial flows (IFFs), and mitigate tax evasion on the continent”. 

He further noted that domestic resource mobilisation is essential for the transformation, self-reliance and sovereignty of the continent in order to build an endogenous economy and achieve Agenda 2063.


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