The Kenya Revenue Authority commissioner-general John Njiraini. PHOTO | FILE
The taxman has set up a unit to monitor cross-border transactions of multinational firms in Kenya, further tightening the noose on non-compliant companies.
The Kenya Revenue Authority (KRA) on Tuesday said the government is also in the process of making laws that would effect agreements already signed with over 85 new tax jurisdictions to facilitate exchange of information on multinational firms.
“KRA has recently established an International Tax Office with two officers dedicated to facilitating officers access to information on cross border transactions from hitherto inaccessible jurisdictions to ensure correct taxes have been declared in Kenya by companies involved in such transactions,” said the taxman on Tuesday in a statement.
KRA commissioner-general John Njiraini a few months ago disclosed that the authority had recovered Sh15 billion from some 30 transnational companies as taxes that had been evaded in previous years.
This amounted to an average of Sh500 million per firm. Assuming this was fully income tax charged at 37.5 per cent on foreign companies, it would be an average of Sh1.33 billion of undeclared income for each firm.
“The Government is concluding necessary legal requirements to enable Kenya to become a party to the MAC (Convention on Mutual Administrative Assistance) in tax in order to facilitate Kenya’s access to information from the over 85 tax jurisdictions that are currently signatories to the agreement.
This is expected to assist KRA to mobilise revenues from hitherto untapped sources and ensure that the country’s revenue targets are met,” said KRA.
The organisation has also joined the Global Forum, the premier international body for ensuring the implementation of the internationally agreed standards of transparency and exchange of information.
“KRA staff will henceforth become better equipped to obtain ownership and accounting information about foreign corporate vehicles, trusts, foundations and shell companies used in aggressive tax planning,” said Mr Njiraini.
“Globally the effect of these exchanges, where applied, has been the demonstrated strong deterrence effect, sending a strong signal to would-be evaders of the risk of detection and attendant punitive consequences,” said KRA in a statement.
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