(PHOTO CREDITS: Courtesy FINANCIAL FORTUNE)

By Steve Umidha

A new tool launched yesterday by Tax Justice Network (TJN) is hoped to be the key to identifying money flows in and out of the country – most of which is believed to be illegal.

The Illicit Financial Flows Vulnerability Tracker measures and visualizes each country’s vulnerability to various forms of illicit financial flows over different periods of time.

Illicit financial flows are transfers of money from one country to another that are forbidden by law, rules or custom. The vice has the potential to hurt economies, societies, public finances and governance of countries if left unchecked over a long period of time.

“A key challenge to tackling illicit financial flows is the difficulty countries face in identifying which financial flows carry the largest risk to their economies. The launch of Illicit Financial Flows Vulnerability Tracker will help countries identify the trading partners and channels that pose the greatest risks to their economies,” reads a statement from the tax network.

(PHOTO CREDITS: Courtesy THE CAMPUS LADY MAGAZINE)

Early this year, Kenya was ranked 24^th in a global financial secrecy index report 2020 conducted by Tax Justice Network Africa. The report indicated how secretive the Kenyan country is at a Global glance.

Recording a 76 score out of 100 in terms of secrecy, Kenya was the second leading country in Africa and the leading in East Africa as a highly secretive nation. The high score placed Kenya at position 24 globally on the Financial Secrecy index of 2020.

Like many other African countries, Kenya got independence over fifty years ago. However, the tax system and global financial state are still being rigged against the country’s interests. This is the reason why most African nations are still depending on foreign aid and borrowing money in the form of loans to sustain their local development.

To date, the sovereignty of African nations has been greatly affected by their governments who have undermined domestic revenue mobilization that is needed for public spending and investments.

(PHOTO CREDITS: Courtesy BUSINESS DAILY)

Kenya and the United States are gearing up to start negotiations on a possible Free Trade Agreement (FTA). Based on the US negotiating objectives released in May, Washington is hoping for a “comprehensive, high-standard agreement” that among other things secures comprehensive duty-free market access for US goods, services and investments.

No sector of the Kenyan economy is off the table including sensitive sectors like agriculture and textile.

Nairobi currently enjoys preferential access to the US market under the African Growth Opportunity Act (AGOA), which is set to expire in 2025.

The Trump administration wishes to replace the AGOA preferential scheme with a deal that among other things ensures zero tariffs on all goods, zero restrictions on foreign direct investment, services, and cross-border data flows, as well as zero discriminatory non-tariff barriers.

A comprehensive trade deal between the No. 1 economy in the world and the No. 67 economy in the world could potentially spur economic growth and improve living standards in Kenya but, from every indication, is fraught with major problems, perils, and pitfalls for Kenya and regional integration efforts in Africa.

Despite public announcements of impending talks, a trade deal is not inevitable. Given the significance and likely impact of a possible Kenya-US deal, Nairobi should, for starters, be guided by these four Rs: Reflect, Respect, Resolve and Re-imagine.

(PHOTO CREDITS: Courtesy SMART INVESTOR)

Kenya should fix gaping holes in beneficial ownership transparency and anti-money laundering regimes to improve its runaway financial secrecy rankings.

Tax Justice Network says Kenya needs to improve access to beneficial ownership information especially those of private companies that are currently limited.

Experts want enforcement bodies, local tax authority like KRA and financial recovery center given more access to data on beneficiaries of privately owned firms.

(PHOTO CREDITS: Courtesy FINANCIAL FORTUNE)

By Steve Umidha

A keen re-look into bilateral tax treaties with foreign countries could help Kenya repatriate some of the black money believed to be stashed abroad, experts have cautioned.

The country’s leadership should also consider entering into Double Taxation Avoidance Agreements (DTAA) with tax havens in order to crack down on tax evaders, prevent money laundering as well as other tax-related offences.

“In order to adjust the level of taxation, there has to be a basis or reference to national law and treaties are about relieving, not imposing tax,” said Maarten Hietland, a researcher and lecturer on corporate tax avoidance by multinational corporations.

He was speaking during the ongoing virtual forum for tax justice advocates in Africa, themed, Tax Justice Advocacy: Increasing Participation of Civil Society Organizations (CSOs) and Journalists through Capacity Building whose aim is to empower the target groups with skills to identify, track, and report illicit outflows from the continent.

The training has been organized by Tax Justice Network (TJN)

A Double Tax Avoidance Agreement (DTAA) is a tax treaty signed between two or more countries to help taxpayers avoid paying double taxes on the same income. A DTAA becomes applicable in cases where an individual is a resident of one nation, but earns income in another.

Over the years, tax cheats and high level individuals with Government protection involved in illegal trade have used this means to launder money in countries such as Mauritius, Netherlands, Luxembourg and Switzerland among other tax havens that have ‘soft’ tax policies and do not levy withholding taxes on some passive income, based on domestic law or tax treaties.

(PHOTO CREDITS: Courtesy SMART INVESTOR)

Kenyan head-quartered Tax Justice Network Africa has expressed concerns corona virus pandemic could spark a surge in the scale and scope of illicit financial flows.

TJNA says the overwhelming onslaught of the deadly bug has distracted authorities, a situation that could create lapse in oversight and a spike in corruption activities at border posts.

“COVID-19 has disrupted the way of doing things. With the onslaught of the global corona virus pandemic, there are concerns that the scale and scope of Illicit Financial Flows (IFFs) could be increasing,” said TJNA Executive Director, Alvin Mosioma.

Trade misinvoicing, smuggling and tax evasion are key forms of illicit financial flows in most developing countries.

The latest trade-related Illicit financial flows report by Global Financial Integrity shows that trade misinvoicing is a persistent problem across developing countries, resulting in potentially massive revenue losses.

(PHOTO CREDITS: Courtesy THE CAMPUS LADY MAGAZINE)

Even with immense Covid-19, there are concerns that the scale and scope of Illicit Financial Flows (IFFs) could be on the rise. While the authorities are busy focusing on the Coronavirus, the Media, Civil Society Organisations (CSOs), trade unions, academia and researchers should be focusing on exposing Illicit Financial Flows.

A multi collaboration between CSOs, Media and other key players, would help reduce the frequent attacks on civil society organisations. These attacks are equally holding back development progress in Africa. While those in the private sector expect a fair, clear and transparent tax and trade policies, they must do their part by ensuring their tax and trade practices comply with local laws.

Illicit Financial Flows are a significant threat to Africa’s Sustainable Development Goals (SDGs). It has slowed and destroyed the progress of African countries’ economies and contributed to the increase of insecurity and inadequacy to raise tax revenues.

Most developing African countries do not maximize the use of domestic resources not because they lack them, but due to the significant levels of Illicit Financial Flows that have reduced the ability to raise the required tax revenues. But with the help of trade union leaders, they will track trends and patterns of illicit financial flows leaving Africa, gather and disseminate the main findings of the report on the high-level panel on flows from Africa.

Otherwise, the Sustainable Development Goals in African developing countries is at risk. IFFs have posed multiple threats on SDGs agenda by consuming the much-needed tax base for public investment and social spending.

(PHOTO CREDITS: Courtesy THE CAMPUS LADY MAGAZINE)

The International Tax Justice Academy (ITJA) 2020 is meant to commence on 22nd June and run through till the 3rd July 2020. Last year, the ITJA was held in Dakar, Senegal but due to COVID-19, ITJA 2020 will be a virtual training.

ITJA is a capacity building program launched in 2014 under the umbrella of the Tax Justice Network Africa (TJNA). The academy was started as a Pan-African initiative to bridge an existing knowledge gap on tax justice in Africa. And since then they have been on course to achieve the goal.

ITJA’s main objectives this year is to encourage the participation of tax justice campaigners at national, regional and global levels. The capacity building program is meant to intensify the capability of Civil Society Organizations (CSO), academia, trade unions, researchers, journalists to enlighten and engage citizens on tax justice issues. Furthermore, the training will strengthen evidence-based advocacy, awareness, and distribution of relevant information to increase knowledge-base, influence policy reform, and monitor progress.