The Kenya Revenue Authority has announced tough new measures to counter multinationals engaging in tax evasion.
Commissioner-General John Njiraini said on Wednesday that KRA would push for the signing of more tax information-sharing agreements with revenue bodies from other jurisdictions to get a clearer picture of international firms’ financial position.
“We need to know what financial information these multinationals publish about their subsidiaries in other countries and what they publish here so that we can understand their true financial position.This can be done through tax agreements with other countries,” said Mr Njiraini at this year’s KRA Annual Tax Summit in Nairobi.
He said the taxman had also increased staff at its International Tax Office from 16 to 40 in a bid to counter multi-nationals from engaging in transfer pricing and lowering their taxable income.
Dubious transfers
Transfer pricing occurs when subsidiaries under one multinational trade with each at low prices, leading to a declaration of lower earnings, meaning little taxes for tax bodies. Njiraini said Kenya is a member of the United Nations Tax Committee and the Global Forum for Tax Information Exchange, all of which encourage nations to share tax information.
The KRA chief manager in charge of the International Tax Office, George Obell, said the taxman has in the past three financial years recovered Sh25 billion from 65 multinationals that had hitherto avoided paying taxes through dubious transfer pricing mechanisms. “What we lacked previously was enough funding and sufficient personnel to follow up on these companies. But now we have that. Come the fiscal year ending June next year, we will report more money recovered from multinationals engaging in transfer pricing,” he said.
Economic Secretary Geoffrey Mwau said KRA must up the fight against tax evasion to enable it to meet its annual tax collection targets.
