Kenya will from next year start sharing taxpayer information automatically with at least 110 countries, marking the latest push in fighting cross-border tax evasion.
Disclosures by the African Development Bank (AfDB) show that Kenya has committed to making the first exchange of taxpayer information by the end of next year alongside Tunisia and Ukraine.
The move is seen as key to tackling tax evasion and inflows of dirty cash, boosting Kenya’s efforts of ramping up tax collections besides boosting the war on money laundering.
Automated sharing of information is part of the Global Forum on Transparency and Exchange of Information for Tax Purposes that started six years ago.
“Five more African countries are committed to implementing Automatic Exchange of Financial Account Information (AEOI) within the next three years. These are Uganda (2023), Kenya and Tunisia (2024) and Morocco and Rwanda (2025),” AfDB says in the disclosures.
Kenya has for years grappled with cases of money being illegally repatriated to other countries, denying the country the much needed cash to spur development projects.
The country had opted to enter into deals for co-operation with Switzerland to recover looted cash from other jurisdictions.
Automated exchange of taxpayer data entails the systematic and periodic transfer of “bulk” such information by the source country to the resident country on categories of income.
Islands that are considered attractive to wealthy individuals evading paying taxes like the Cayman Islands and the British Virgin Islands are signatories to the League of countries under the AEOI.
Uganda, Ghana and Nigeria are the latest countries to join the AEOI in the last three years as more African countries seek to enhance transparency on taxation.
Kenya is one of the 34 African nations that had signed to join the global tax transparency network by December last year.
The AfDB disclosures show that four African nations raised an additional Euro 76.6 million (Sh10.146 billion) in taxes, interest and penalties last year through the AEOI.
The Euro 76.6 million is the highest combined amount by African nations in a year since they joined the league in 2014.
The AU reckons that AEOI is a critical plank for Member States in the war against tax evasion and money laundering.
Tax transparency is also key to fighting terrorism financing and corruption receipts in a continent known for its vast mineral resources that have not transformed the economy.
“As exchange of information is now well established as an effective tool to tackle tax evasion and other Illicit Financial Flows (IFF), it can play a critical role in enhancing African countries’ domestic resource mobilisation efforts” AU notes.