•According to the Tax Transparency in Africa 2023 - Africa Initiative Progress Report, Africa loses up to $60 billion (Sh7.9 trillion) annually in illicit financial flows..
•The report highlights that African countries identified over €310 million (Sh44 billion) through exchange of information on request, between 2019 and 2022.
Image: PCS
Kenya has been rated ‘Largely Compliant (LC)’ on implementation of the international standard for transparency and exchange of information on request (EOIR) for tax purposes.
This was announced during the 46th Peer Review Group (PRG) meeting at the Organisation for Economic Co-operation and Development (OECD) Conference Centre in Paris, France.
The EOIR Peer Review report and LC rating for Kenya was subsequently approved and adopted by the Global Forum Plenary consisting of 171 member jurisdictions.
In a statement on Thursday, Kenya Revenue Authority (KRA) said the rating underscores Kenya's favourable legal and administrative framework in tax transparency.
"A positive EOIR rating is an indication that various government bodies and agencies in Kenya have adequate laws and practices in place, which are in line with the international standards,"KRA commissioner general Humphrey Wattanga noted.
Wattanga led the Kenyan delegation consisting of representatives from KRA, the Financial Reporting Centre and the Central Bank of Kenya during the PRG meeting.
The representatives were part of the Kenya EOIR Peer Review Committee, which consisted of technical representatives from the National Treasury, Business Registration Service, Central Bank, Financial Reporting Centre, Attorney General’s Office, Ministry of Lands, Law Society of Kenya, Institute of Certified Public Accountants of Kenya, Capital Markets Authority, Kenya Bankers Association and KRA.
The EOIR peer review encompassed a combined assessment of the legal and regulatory framework and implementation of the EOIR framework in practice, as well as enhanced obligations on the Beneficial Ownership regime.
The EOIR standard requires the Global Forum members to ensure the availability of adequate, accurate and up to date information on all relevant legal entities and arrangements and to ensure that tax administrations are able to obtain the information needed to assess taxpayers’ activities, regardless of where they take place.
All Global Forum members, including Kenya, commit to being peer reviewed against the EOIR standard, through evaluation of the effectiveness of their legal and regulatory frameworks in practice.
This thorough monitoring process ensures that the 171 jurisdictions are implementing the exchange of information standards effectively.
"The positive rating also affirms Kenya’s ability to utilise Exchange of Information (EOI) for domestic resource mobilisation," Wattanga said.
International cooperation based on transparency and effective exchange of information standards for tax purposes has become a crucial tool in addressing global challenges of tax avoidance and evasion.
According to the Tax Transparency in Africa 2023 - Africa Initiative Progress Report, Africa loses up to $60 billion (Sh7.9 trillion) annually in illicit financial flows.
As a member of the Global Forum, Kenya participates in a multilateral framework emphasising tax transparency and EOI.
"This collaboration is pivotal in maintaining the integrity of the EOI standard and enhancing efforts to combat tax evasion, corruption, and money laundering," the taxman noted.
The Tax Transparency in Africa report highlights that African countries identified over €310 million (Sh44 billion) through exchange of information on request, between 2019 and 2022.
Kenya was also given 11 recommendations to implement to enable the country enhance its compliance with the international standards for transparency and exchange of information.
The main one is to ensure beneficial ownership and identification information is available for all relevant trusts in line with the set standards, with up to date records.
KRA is engaging various agencies in developing strategies for implementation of the review recommendations, it said, with Kenya expected to update the Global Forum on progress made by 2026.