𝗧𝗵𝘂𝗿𝘀𝗱𝗮𝘆, 𝗙𝗲𝗯𝗿𝘂𝗮𝗿𝘆 𝟮𝟵, 𝟮𝟬𝟮𝟰

The Departmental Committee on Finance and National, chaired by Hon. Kuria Kimani (Molo) has been called upon to review and ratify the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).

This call was made by the Cabinet Secretary (CS), of National Treasury and Economic Planning, Prof. Njuguna Ndung'u, yesterday when he appeared before the Committee. His appearance marked the commencement of stakeholder engagements on the matter.

The CS took Members through the contents of the MLI, emphasizing its importance in protecting Kenya’s tax base.

The MLI was developed in 2015 to modify existing Bilateral Agreements for the avoidance of Double Taxation (DTAs). Kenya signed the MLI on the 26th of November 2019, and the Cabinet approved the ratification, further directing the Cabinet Secretaries for National Treasury and Diaspora Affairs, along with the Attorney General, to take appropriate action.

The basis behind the development of the MLI was the backdrop of governments losing substantial corporate tax revenue because of aggressive international tax planning. This had the effect of artificially shifting profits to locations where they were subject to non-taxation or reduced taxation. The MLI therefore strengthens international tax engagements, to prevent parties from evading tax.

To date, 102 jurisdictions have joined the MLI, out of which 85 jurisdictions have ratified, accepted or approved the MLI, and it covers around 1,900 bilateral tax treaties.

The CS also told the Committee that Kenya is working towards transitioning from the grey list to a more favourable status, bolstering its efforts in Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT). He further emphasized the need and urgency of exiting the grey.

Some of the key interventions highlighted by the CS include the completion of a risk assessment that will provide results in terms of how consistent Kenya is with the requirements.

Further, the CS told the Committee that Kenya has introduced 17 amendments to laws that deal with the treaty.

 “The key steps we need to take is to look at the legal reforms, and how we take those 17 legislations to address technical compliance with enactment of those coming into force." Stated Prof. Ndung'u.

Turning to the National Tax Policy that the National Treasury submitted, Hon. Kuria advised the Treasury to incorporate all resolutions that were passed by the National Assembly, and then propose amendments to areas that may be unclear.