NAIROBI, Kenya, Jul 3 – The Kenya Revenue Authority (KRA) 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.
The just-published Tax Transparency in Africa 2020 Report confirms that following the upscaling 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 due from international sources. This is mainly due to the growing number of countries joining the Convention on Mutual Administrative Assistance in Tax Matters.
The report acknowledges that significant progress has been made in fighting tax evasion and illicit financial flows in Africa, but further efforts needed to support domestic revenue mobilisation.
Having signed the Yaoundé Declaration in November last year, the Tax Transparency in Africa 2020 publication confirms that Kenya- through KRA -has managed to identify more than US$1.3million 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. 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.
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.
Speaking in Nairobi, KRA Commissioner General Githii Mburu said the report had aptly captured the progress made to curb illicit financial flows following the signing of international protocols focused on improving international tax cooperation through enhanced information sharing among the African Union (A.U.) member states.
“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,” Mburu said, adding that, “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 Tax Transparency in Africa 2020 publication outlines the progress made by 32 African Union Member States, members of the Africa Initiative and three non-members. The publication 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 (IFFs) and increase domestic revenue mobilisation.
On Kenya, the report says: “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. 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. In total, between 2014 and 2019, a group of eight African countries have identified USD 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.