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Kenya has “officially” waged war against tax avoidance and evasion schemes, as mirrored by the recent enactment of the Tax Procedures Act of 2015. The war has now been advanced to international levels, whereby Kenya signed the Convention on Mutual Administrative Assistance in Tax Matters on 8th February 2016. Kenya is the 12th African country to sign it and the 94th jurisdiction, globally. The Convention covers a number of taxes including Income tax, capital gains tax, VAT and excise taxes are all globally included in this Convention.
Enhancing co-operation between countries to counter international tax evasion, tax avoidance and other forms of noncompliance is the principal aim of the Convention. It also aims at facilitating exchange of information, assistance in tax recovery, service of documents and joint tax audits by parties to the Convention. Parties to the Convention have a general obligation to exchange any information relevant for the administration or enforcement of their domestic tax legislation.It is noteworthy that only information considered relevant for tax purposes will be exchanged either upon request, automatic or spontaneous exchange, or through the carrying out of simultaneous tax examinations abroad.
From a taxpayer’s perspective, one of the greatest benefits of this Convention is that it reduces compliance costs. From the government’s perspective, the Convention will serve as a valuable tool for fighting tax evasion. It will also foster the enforcement of other legal frameworks against certain evils like money laundering and corruption. Furthermore, the Convention will not only make it possible to reveal the names of persons suspected and found guilty of tax evasion, but also make it easier for the government to pursue them locally and internationally.