Kenya signs Africa deal to fight illicit cash flows

KRA Commissioner-General Githii Mburu. FILE PHOTO | NMG 

By CONSTANT MUNDA
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Summary

• This makes Kenya the 27th country to join the league of African countries jointly fighting tax evasion through illegal flow of cash across the borders.

Kenya has committed to start sharing and receiving information on firms and individuals evading taxes within Africa in a renewed war on illicit financial flows on the continent.

Acting Treasury secretary Ukur Yatani has signed the November, 2017, Yaoundé Declaration, making Kenya the 27th country to join the league of African countries jointly fighting tax evasion through illegal flow of cash across the borders.

The Yaoundé Declaration followed the 10th plenary meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes — a framework bringing together more than 150 jurisdiction including on transparency on tax-related information — held in Cameroonian capital between November 15 and 17, 2017.

“Kenya is encouraged by the Yaoundé Declaration and its call for action to tackle illicit financial flows in Africa through improved international tax cooperation,” Mr Yatani said in communication to Global Forum chairperson Maria-Jose Garde.

“This is a clear message from African Ministers on the fight against tax evasion, which we need to enunciate at the right level across the continent."

Cameroon, Uganda, Liberia and Benin were the first signatories in Yaoundé and were last year joined by 19 other nations, including South Africa and Nigeria — the most developed and biggest economies on the continent, respectively.

Kenya has now joined Morocco (March), Tunisia (May) and Djibouti (November) as the latest signatories this year.

The document is an initiative by the African Union on tax co-operation and illicit financial flows with a view to enhancing domestic revenue mobilisation.

The initiative is backed by the Global Forum and its African members, in collaboration with the United Nations Economic Commission for Africa, Regional Economic Communities and the African Development Bank.

Illicit financial flows (IFFs) is said to be massive, with the UN, for instance, estimating that between $1.2 trillion and $1.4 trillion left Africa between 1980 and 2009, more than half of Africa's gross domestic product (GDP).

Part of the Sh7.3 billion of the older Sh1,000 notes which was not returned to the banking system by the September 30 demonetisation exercise was suspected to have been part of the illicit financial flow from Kenya.

"KRA is encouraged by the government's swift moves to prioritiSe the signing of international treaties that will accelerate efforts to curb international tax evasion," KRA commissioner general Githii Mburu said in a statement.