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Director of the OECD’s Centre for Tax Policy and Administration, Pascal Saint-Amans and KRA Commissioner General Githii Mburu

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KRA, OECD executives make headway on digital economy taxation agreement

NAIROBI, Kenya Jan 29-The Kenya Revenue Authority (KRA) and the Organization of Economic Cooperation and Development (OECD) have this week made significant progress on their joint efforts to address tax challenges arising from the digitalisation of the economy.

Senior technical officials led by KRA Commissioner General Githii Mburu and the Director of the Centre for Tax Policy and Administration at the OECD, Pascal Saint-Amans, speaking at the close of a three-day engagement workshop in Naivasha, confirmed that the two organisations had agreed to step up their collaboration efforts.

The stepping up of the collaboration efforts will prioritise technical engagements on OECD/G20 Inclusive Framework (IF) on Base Erosion and Profit Shifting agreement formed to reform international tax rules, among other areas of mutual interest.

With the IF Two-Pillar Solution, all types of economies will benefit from extra tax revenues.

Under pillar one, taxing rights on more than $125 billion of profit are expected to be reallocated to market jurisdictions each year.

On pillar two, the global minimum tax of 15 per cent is estimated to generate around $150 billion in additional global tax revenues annually.

Kenya, a member of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting and has been actively participating and engaging with the OECD on the challenges of taxation of the digital economy.

In recent times, the OECD Centre for Tax Policy and Administration has stepped up engagements seeking to have Kenya sign-in on the IF agreement designed to ensure that Multinational Enterprises (MNEs) are subjected to a minimum 15 per cent tax rate from 2023.

The IF agreement announced mid last year has won the support of 137 global jurisdictions, with the OECD targeting to bring to the fold all 141 OECD and G20 countries.

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Kenya is among the four countries that are yet to sign the agreement formally.

The Naivasha meeting staged this week, Mburu and Saint-Amans said was a critical step towards anticipating the possible benefits and concerns of the two-pillar solution.

“KRA and OECD commit to continue deepening their engagements for mutual benefit. The parties will continue partnering to implement various initiatives to improve international tax standards and enhance tax transparency globally,” Mburu and Saint-Amans jointly confirmed.

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