Banks in Kenya have begun sharing information about foreign account holders with the Kenya Revenue Authority (KRA) to crack down on tax evasion and illicit wealth.
This move comes as the KRA implements the common reporting standards (CRS), which facilitate the seamless sharing of taxpayer information between countries.
Individual account holders will have details such as account balance, address, date of birth, and tax residence shared with the taxman.
Corporate entities will also have information on registration, entity type, and controlling persons forwarded to the KRA.
These details will be shared with 106 signatory countries,
including popular tax havens such as Switzerland, Panama, and the Cayman Islands.
The implementation of CRS aims to enhance the KRA’s ability to uncover cash hidden in offshore accounts.
Banks are required to review existing accounts with balances above $250,000 belonging to foreigners.
However, there are concerns about maintaining customer confidentiality and complying with the Data Protection Act.
Robert Waruiru, a partner at Ichiban Tax & Business Advisory LLP,
highlights the importance of data safeguards and suggests that EU tax residents will be subject to more stringent regulations.
“The CRS requires participating authorities to have data safeguards in place, and I think this is what the Data Protection Act resolves. EU tax residents will be subject to much more stringent EU data regulations,”Robert said.
Kenya’s participation in CRS is part of its efforts to expose assets held by Kenyans abroad,
particularly those in low-tax jurisdictions.
In 2017, the Treasury introduced a tax amnesty offer to incentivise Kenyan investors –
with wealth stashed abroad to repatriate their assets without penalties.
Additionally, Kenya reached an agreement with the Jersey government in the same year for the-
repatriation of over Sh380 million confiscated from a company linked to a former Kenya Power managing director.
The common reporting standards were developed by the Organisation for Economic Co-operation and
Development (OECD) in 2014 to combat tax evasion through the annual sharing of information among jurisdictions.
Kenya adopted these standards in the Finance Act of 2021,
enabling the KRA to request taxpayer information from other tax authorities.
This move signifies Kenya’s commitment to transparency and combating tax evasion.
However,Kenyan banks have begun sharing foreign account holders’ information with the KRA under the common reporting standards.
This initiative aims to expose tax evasion and illicit wealth held in offshore accounts.
While concerns about customer confidentiality and data protection exist, Kenya is determined to uncover assets held by Kenyans abroad.
Consequently,the adoption of CRS demonstrates Kenya’s commitment to international tax transparency and cooperation.
