Kenya has been reported the leading nation in Africa that condones money laundering, tax evasion, and people having untaxed wealth.
According to the Financial Secrecy Index of the Tax Justice Network, Kenya has ranked at position 24 globally and ahead of Nigeria (34), Angola (35), Egypt (46) Mauritius (51), Cameroon (53) and South Africa (58).
In its latest report, the United Nations Conference on Trade and Development (UNCTAD) lists the world’s top providers of financial secrecy as Cayman Islands, United States, Switzerland, Hong Kong (China), Singapore, Luxembourg, Japan, Netherlands, British Virgin Islands, United Arab Emirates.
As per the report, digital business models have allowed firms to avoid tax liabilities.
The problem has been existent in the continent with governments seeking to address this problem through a variety of routes beyond simply corporate income tax. Some nations have adopted a range of innovative measures to address the main problem which is low corporate income taxes.
Kenya itself has designed a proposal to expand its definition of a permanent establishment, to include digital advertising platforms. Some African countries have been seeking to use other taxes to respond to the situation.
This includes value-added tax, which, for example, South Africa has now imposed on sales of applications through mobile platforms.
Kenya has also recorded the second-largest amount in returned stolen assets to African countries as at January 2020.
At KSh17 billion, Kenya is third behind Libya (Sh14.2 billion) and Nigeria, which commands a healthy lead at Sh1.4 trillion in recovered stolen cash as of early this year.
The UNCTAD Economic Development in Africa Report 2020 notes that Africa loses KSh 8.9 Billion in illicit financial flows every year.
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