Kenya should share in global corporation tax

Kenya should demand a share of the new Global Corporation Tax so that it can drop its cumbersome and ineffective Digital Services Tax.

by star editor

Eastern07 June 2021 - 10:12

In Summary

• Last year Microsoft earned $315 billion in licence fees but paid no tax because the money went to Bermuda

• The G7 governments have now agreed that global companies should pay at leat 15 percent corporation tax

EU's Economy Commissioner Paolo Gentiloni, Eurogroup President Paschal Donohoe, World Bank President David Malpass, Italy's Finance Minister Daniele Franco, French Finance Minister Bruno Le Maire, Canada's Finance Minister Chrystia Freeland, Britain's Chancellor of the Exchequer Chancellor Rishi Sunak, Managing Director of the IMF Kristalina Georgieva, Germany's Finance Minister Olaf Scholz, U.S. Treasury Secretary Janet Yellen, Secretary-General of the Organisation for Economic Co-operation and Development (OECD) Mathias Cormann, Japan's Finance Minister Taro Aso pose for a family photo during the G7 finance ministers meeting at Lancaster House in London, Britain, June 5, 2021.

Last Friday G7 finance ministers agreed that giant global companies should pay at least 15 percent corporation tax on their global profits.

Last year Microsoft earned around US$315 billion in licence sales but paid no corporation tax because the money went to a holding company in Bermuda.

All companies should pay a share of their profits as tax, ideally in the jurisdiction where they made that that profit. So the new G7 global corporation tax is a step in the right direction.

The US government first proposed the 15 percent minimum global corporation tax, partly in response to European proposals to tax digital revenues.

On January 1, Kenya imposed a 1.5 percent Digital Service Tax to tackle companies like Facebook and Google paying no tax here. However this tax may prove unenforceable because KRA cannot Google or Facebook records for digital advertising in Kenya.

The G7 should now make this new global corporation tax inclusive and universal. Countries like Kenya should be able to access their rightful share of this global tax on profits. Kenya could then drop its cumbersome and ineffective Digital Service Tax.

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The 10th President of Nigeria died on June 8, 1998