This archive report was first published on 1 July 2021.
July 2, 2021, marked a significant development in Kenya's tax landscape as the Kenya Revenue Authority (KRA) set its sights on accessing financial transactions of secret shareholders who invest in domestic firms through nominee accounts and directors.
The taxman's move is aimed at expanding the tax base and mitigating tax evasion amongst secret shareholders in local firms. According to Terra Saidimu, KRA commissioner for Intelligence and Strategic Operations, the taxman will target nominee accounts held by local and international investors.
The proposed implementation of a global convention on automatic sharing of tax information with other countries will enable KRA to exchange data with other jurisdictions, facilitating the exchange of information either through request or automatic exchange of information.
Dr. Saidimu emphasized that the disclosure of beneficial owners is increasingly becoming a global practice, citing the infamous 'Panama Papers' in 2016 which revealed high net-worth individuals, including politicians, using elaborate corporate structures and offshore tax havens to hide beneficial owners.
The KRA has a revenue target of Sh1.61 trillion for the current fiscal year, and the proposed amendment to the Tax Procedures Act will facilitate the implementation of the Multilateral Convention for Mutual Administrative Assistance in Tax Matters (MAC), which Kenya ratified in July 2020.
