Registrar of Companies Joyce Koech says the taxman, Ethics and Anti-Corruption Commission (EACC) and the Financial Reporting Centre (FRC)— which tracks money launderers — have started making requests for data.
This came months after the State compelled firms to provide details such as names, phone numbers and residential addresses of investors who own more than 10 percent stakes in companies through secret accounts.
About 198,000 or 33 percent of 600,000 private companies have made disclosures on their beneficial owners.
The Kenya Revenue Authority (KRA) and the anti-graft agency have started mining data from a registry of secret shareholders disclosed to the Attorney-General in a fresh crackdown on corrupt individuals and tax cheats.
Registrar of Companies Joyce Koech says the taxman, Ethics and Anti-Corruption Commission (EACC) and the Financial Reporting Centre (FRC)— which tracks money launderers — have started making requests for data.
This came months after the State compelled firms to provide details such as names, phone numbers and residential addresses of investors who own more than 10 percent stakes in companies through secret accounts.
The order gave effect to the changes in the Companies Act, promising to unmask rich and influential business owners who choose to hide their identities behind trusts, foundations and law firms to avoid scrutiny.
“We are starting to see requests from EACC, KRA and FRC utilising this information. By mid-last year we started seeing a few requests and they kept increasing towards the end of the year,” said Ms Koech.
About 198,000 or 33 percent of 600,000 private companies have made disclosures on their beneficial owners.
The disclosures are aimed at curbing tax evasion and illicit flow of money by revealing the true identity of investors owning large blocks of shares in both private and listed companies.
Under the regulations, firms are now compelled to reveal the identities of secret shareholders who control more than 10 percent of firms to the Attorney-General through the Registrar of Companies.
The details required for filing include names of the substantial shareholder, KRA Personal Identification Number, national identity card or passport copies, postal address, residential address, occupation, telephone number and the date when the investor became a beneficial owner.
Firms have been empowered by the regulations to stop paying dividends, block share transfers and end rights for board appointments as well as voting power to substantial investors who fail to provide their particulars for forwarding to the State.
Most high-net-worth shareholders at the NSE #ticker:NSE hold shares through nominee accounts, with the list of top 10 shareholders in a majority of blue-chip firms dominated by anonymous investors.
The situation is worse in private companies, which is the target of the government.
Firms have been empowered by the regulations to stop paying dividends, block share transfers and end rights for board appointments as well as voting power to substantial investors who fail to provide their particulars for forwarding to the State.
The disclosure of beneficial owners is increasingly becoming a global practice.
This followed the infamous ‘Panama Papers’ in 2016, which revealed high net-worth individuals such as politicians, use elaborate corporate structures — including nominee directors — and offshore tax havens to hide beneficial owners.
“We do not request blanket information about a certain transaction, but specific information against a certain individual linked to a KRA PIN,” said KRA Commissioner for Intelligence and Strategic Operations Terra Saidimu earlier
“If we have a company registered abroad or a multinational … and it has a nominee person and they have declared a bill, we’ll be able to get information on that company in terms of transactions and we’ll link it with the declaration of taxes — whether it has been declared or not.”
The law bars companies from making public the personal details of the beneficial owners but opens the window for the KRA, security agencies and the FRC to tap the information.
This is a pointer that the State is keen to use the information to tap money launderers, corrupt individuals and tax cheats via the data.
The KRA enforcement unit has been using various databases to pursue suspected tax cheats, including bank statements, import records, motor vehicle registration details, Kenya Power records, water bills and data from the Kenya Civil Aviation Authority, which reveals individuals who own aircraft.
Motor vehicle registration details are also being used to smoke out individuals who are driving high-end models but have little to show in terms of taxes remitted.
Kenya Power meter registrations are helping the taxman to identify landlords, some of who have been slapped with huge tax demands.
The taxman is racing to bring more people into the tax bracket and curb tax cheats and evasion in the quest to meet revenue targets that it has persistently missed in recent years.
