Daily Nation ­ Tuesday
Date: 28.03.2017
Page 45,46
Article size: 223 cm2
ColumnCM: 49.55
AVE: 107040.0
Profit shifting leaves Kenya with gaping budget hole
more than Sh15 billion through trade­
related tax incentives depriving the
country of badly­needed resources to
reduce poverty and improve the gen­
eral welfare of the population.
Recently, MPs were alarmed by
the small amount of tax paid by cab
firm Uber claiming that the bulk of
the profits is repatriated outside the
country.
the 'LuxLeaks' revelations.
resource mobilisation capabilities
especially with regard to the incen­
Financial centre
tive structure. "With so much powers
East Africa Tax and Governance
given to the Cabinet secretary and
Network (EATGN) Coordinator Robert
KRA not involved in the major deci­
Mwanyumba told Smart Company
sion making, one can only expect
that the situation is bound to be
worse if the recently­tabled Nairobi
International Financial Centre (NIFC)
Bill 2016 is enacted into law.
The Bill which on Thursday sailed
The Kenya Revenue Authority (KRA)
through its second reading in Par­
told MPs Tuesday that Uber had paid
Sh30 million in taxes since 2014 with
the National Assembly's Transport
committee saying it had information
that the firm rakes in billions of shil­
lings and repatriates it to its head­
quarters in San Francisco, California,
USA.
Other global giants such as Google
and Amazon have come under fire for
avoiding paying tax in their countries
of operation, igniting fights with au­
thorities.
KRA had not carried out any audits
on Uber but indicated there were
liament seeks to create a financial
centre to provide funding for key
development projects, employment
opportunities particularly for the
burgeoning young population and
encouraging domestic and foreign
investment as well as improving
competition in the domestic financial
services.
Adopting the Mauritian approach,
Kenya is expected to aggressively
campaign for investments through
the centre, undermining domestic
that these incentive will increase in
number and the multinationals who
engage in aggressive tax planning will
find Kenya their easiest target. These
firms rarely even offer quality jobs to
the locals as much as they engage in
tax evasion after successfully avoiding
to pay billions," Mr Mwanyumba said.
In 2013, KRA put local audit firms
on the spot for helping multinational
firms evade paying billions of shillings
in taxes. The authority recovered Sh4
billion in unpaid dues following an
audit of 40 multinationals who had
employed top local audit firms.
The profit shifting game is aided by
the deep financial secrecy in their ju­
risdictions with Kenya facing a bigger
threat in dealing with multinationals
from couturiers with high secrecy.
plans to do it to ascertain whether
what the taxman collects is what is
due as entry of multinationals con­
tinue to complicate Kenya's bid to
increase revenue.
Profit shifting has been a big focus
of international attention since scan­
dals at companies such as Apple and
Amazon revealed the scale of distor­
tions ­ and the systemic nature of
avoidance schemes marketed by big
accounting firms was then laid bare in
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya