Kenya signs deal in France to end tax avoidance by multinational firms
Kenya has signed a multilateral convention to end tax avoidance among multinational companies.
Kenya now becomes the 91st jurisdiction to join the convention which covers over 1600 bilateral tax treaties.
“The convention, will strengthen the existing international tax treaties network by ensuring that issues of treaty abuse are addressed, dispute resolution is strengthened. This will ensure that Kenya gets her fair share of taxes from multinational firms operating in the country,” said Prof. Judi Wakhungu, Kenya’s envoy to France.
Prof. Wakhungu added that Kenya remains committed to the work of the inclusive framework and reaffirmed her commitment to implementing the BEPS minimum standards.
The Convention became effective on 1 January 2019 and now applies to 99 tax treaties concluded among the 37 jurisdictions that have already deposited their instrument of acceptance, approval or ratification.
The aim of the Multilateral Convention is to implement tax treaty related measures to prevent base erosion and profit shifting.
Under the OECD/G20 BEPS Project, the convention will allow international collaboration initiatives to end tax avoidance among multinational firms.
The OECD/G20 BEPS Project, where 130 countries have collaborated, provides solutions to the governments to close the gaps in existing international rules that allow corporate profits to “disappear” or be artificially shifted to low or no tax environments, where companies have little or no economic activity.
According to the OECD, BEPS practices cost countries US$100-240 billion in lost revenue annually, which is the equivalent to 4-10% of the global corporate income tax revenue.
“The Global Forum has been a game-changer. Thanks to international co‑operation, tax authorities now have access to a huge trove of information that was previously beyond reach. Tax authorities are talking to each other and taxpayers are starting to understand that there’s nowhere left to hide. The benefits to the tax system’s fairness are enormous,” OECD Secretary-General Angel Gurría said.
The Africa Initiative has helped African members identify over EURO90 million around ( Ksh.10 billion) in additional tax revenues in 2018, thanks to information exchanges and voluntary disclosures.
To improve developing countries’ uptake of automatic exchange of financial information, the OECD-UNDP Tax Inspectors Without Borders Initiative today launched a pilot project aimed at supporting the effective use of the data.
“The modifications introduced by the Convention serve to protect our treaty network by countering treaty shopping, and ensuring that income will be taxed in at least one of the partner states,” KRA Commissioner General Githii Mburu said.
For Citizen TV updates
Join @citizentvke Telegram channel
Video Of The Day: Private hospitals on the spot for making patients commodities