•Approximately 91 per cent of Africa, a total of 21 countries out of 23, inclusive of Kenya, give the recovery tax claims a high level of priority in relation to revenue growth.
•From a survey to establish the knowledge levels across the continent, only three respondents, 13 per cent representation reported a high level of knowledge,
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The legal tools, procedures and resources available for the 2021 year period were not effectively utilised to collect or recover outstanding tax claims.
This is according to the 2022 Africa Initiative Progress Report on tax transparency across the continent.
It notes that majority of the African jurisdictions had low level of knowledge of cross-border assistance in tax recovery compared to knowledge about tax claims at the level.
This it terms as one of the major challenges to the available tools for tax recovery.
"From a survey to establish the knowledge levels across the continent, only three respondents, 13 per cent representation reported a high level of knowledge, while seven, 30 per cent, rated their knowledge as medium and 13, representing 57 per cent as low," says the report.
This, despite all the respondents having in place the requisite international legal gateways for this form of administrative assistance.
Approximately 91 per cent of Africa, a total of 21 countries out of 23, inclusive of Kenya, give the recovery tax claims a high level of priority in relation to revenue growth.
In the year under review, 22 per cent of the survey respondents are noted to have sent a total of 13 requests for assistance to recover tax claims.
This represents a total of $ 10.2 million during the 2018-2020 period.
During the same time, a similar number of respondents had received 123 requests, representing $45.4 million:and had recovered for their partners $26.9 million.
This pointed to the need for raising awareness on how this form of assistance works and its potential benefits for African countries.
In Kenya, the evolution and establishment of the Exchange of information (EOI), the cross-border sharing of taxpayer information by tax administrations, saw the country send only one request during the 2014 to 2018 period.
This was due to the manual EOI processes, the lack of awareness on the potential of EOI from tax auditors and investigators, and a limited EOI networks.
But after considerations to strengthen the systems in 2019 by Kenya Revenue Authority (KRA) in efforts tk make the country a visible player in tax transparency, the use of EOI has steadily increased from one request in 2018 to 17 in 2019, 73 in 2020 and 173 in 2021.
This resulted into increased revenue gain realised with $1.05 million (Sh130 million) in 2019, $82 560 (Sh10.5 million) in 2020 and $8.5 million (Sh985.2 million) in 2021.
Building on this success, Kenya embraced a new challenge by committing in 2020 to implementing the Automatic Exchange of Information (AEOI) standard with first exchange in September 2022.
With the country losing more than Sh60 billion annually in tax evasions cases, according to the taxman, the report notes that there is a close link between the recovery of domestic tax debt and the cross-border assistance in the recovery of tax claims.
"Therefore, a strong domestic tax debt recovery program is a pre-requisite to effective cross-border assistance to recover tax claims," the report reads
Other country respondents are reported to be losing more than Sh10 billion annually to tax evasion cases.