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Kenya Revenue Authority (KRA) saved $8.5 million (Sh996 million) in revenues from potential tax cheats in 2021 as a result leveraging a global Exchange of Information (EOI) that tackles tax evasion and illicit financial flows.

According to the Africa Initiative progress report 2022 by the Global Forum covering 38 countries in Africa, the savings reflect a 99 per cent improvement compared to 2020, signalling Kenya’s breakthrough in a bid to dismantle banking and assets secrecy in offshore accounts.

Revenue mobilisation

“The EOI function in Kenya over the years is a demonstration of the critical role played by top management strong support and involvement to improve the organisation of the EOI unit, provide the resources needed and enhance the relevant confidentiality principles, with an aim of effectively increasing domestic revenue mobilisation through tackling cross-border tax evasion,” read the report.

The report estimates that African countries have realised over $1.3 billion of additional revenues in the last eight years, comprising of tax, interests and penalties through offshore tax investigation partly conducted by EOI requests.

Kenya had the highest number of investigation requests, at 173 in 2021, accounting 45 per cent of all requests sent by African countries. Launched in 2014, the Africa Initiative Working Group that is chaired by KRA Commissioner General Githii Mburu, ensures member states equipped with EOI unit, tracking systems, Competent Authorities (CA) delegation and EOI manual to combat tax evasions.

“The Tax Transparency in Africa 2022 report is an enlightening testament to the valuable gains made in the fight against tax evasion and illicit financial flows through consistent utilisation of EOI networks and tools,” said Mburu.

Kenya is expected to make a commitment on automatic exchange of financial account information (AEOI) standard, representing missed opportunities to help the taxman net more avenues abroad. 

Key benefit is encourageing residents to declare financial assets and income in other jurisdictions.