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Time is ripe for a tax institute in Kenya

tax

Nowadays it is not uncommon to find a tax manager or even a transfer pricing manager in the Kenyan corporate scene. FILE PHOTO | NMG

Tax has, for the better part of this year, dominated the Kenyan media headlines. Kenyans are now more aware of taxation and its impact on their everyday lives. The Kenya Revenue Authority (“KRA”) has managed to rollout the iTax platform that has had a profound and positive impact on tax compliance in Kenya.

There has been no shortage of legislation affecting tax matters in Kenya in recent years. This has had the impact of bring tax discussions into the breakfast tables and living rooms across Kenya, discussions which previously have been a preserve of boardrooms. Taxes, and tax systems, are fundamental components of any attempts to build nations, and this is particularly the case in developing nations such as Kenya.

Since the Narc era, there has been a colossal shift in how the tax system is administered and this led to KRA achieving remarkable growth in revenue collection in consecutive years. This led to the tremendous growth of the taxation industry in Kenya in the last 15 years.

The Big Four accounting firms as well as mid-tier firms now have annual recruitment drives for auditors as well as tax consultants. Ten years ago, very few corporates, including blue chip multinationals, had a full time tax manager in their ranks. Nowadays it is not uncommon to find a tax manager or even a transfer pricing manager in the Kenyan corporate scene.

The variety of functions performed by tax consultants overlap the responsibilities ordinarily carried out by other professionals, namely lawyers and accountants. Lawyers and accountants are regulated professions and thus are guaranteed monopolies in practicing in their respective areas through the Law Society of Kenya (LSK) and the Institute of Certified Public Accountants of Kenya (ICPAK).

This has however not been the case for the tax professionals in Kenya. Tax advisors play an important role in the economy. It would be difficult to have a well-functioning tax system without tax advisors. Because most taxpayers are not familiar with the intricacies of the tax laws, tax advisors are needed so that taxpayers can fulfill their complicated tax obligations. As informed members of the public, tax advisors also provide input to the formulation of legislation and regulations.

By advising taxpayers on how to comply with their legal obligations, tax advisors serve an important public interest. Establishing a tax institute also has the goal of protecting the public from unscrupulous or incompetent tax advisors.

According to PwC’s annual Africa tax survey published in 2016, tax is considered to be one of the primary constraints of doing business in Africa. This has led to a relatively high appetite for tax planning.

With more opportunities for tax professionals in Kenya as well as the ever-expanding tax arena, there is an overdue need for a tax institute in Kenya, a professional body exclusively dedicated to tax matters.

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There is therefore a strong need in Kenya for the establishment and recognition of an independent, self-governing professional tax body that shall be responsible for, among other things, establishing the prerequisites for admission to practice in the profession, the continuing education and other conditions for continuing qualification, and the disciplining of members of the tax profession with respect to breaches of their professional responsibilities.

This shall lead to consolidation of gains in the tax field in Kenya as well as expand the professional capacity of tax professionals. This shall have positive outcomes such as a leading tax professionals body that will advocate for the highest standard of technical and professional competency in taxation matters in Kenya; a tax educational body that will register tax professionals in Kenya and be the gold standard in fiscal education East Africa; publishing of a regional tax journal; and promotion of sound tax policies that will spur economic growth.

The tax institute shall be committed to the role it can play in tax education and tax policy in Kenya and in building an efficient and innovative tax system that contributes to a successful economy and society. It shall also committed to the future of the tax profession, its members and its role in serving Kenya’s best interests in an increasingly turbulent tax world order.

Zaki Sheikh, director, Ashford Consultants Ltd