A global report shows that wealthy Kenyans are hiding $4.2 billion (Ksh457 billion) in offshore accounts.
This has denied the Kenya Revenue Authority (KRA) $63.4 million (Ksh6.9 billion) in tax revenues.
The State of Tax Justice 2020 report released by Tax Justice Network and Global Alliance for Tax Justice shows that the money stashed in low tax territories equals 4.8 per cent of the country’s Gross Domestic Product (GDP).
The report also shows that multinational corporations are shifting $1.38 trillion (Sh150 trillion)in profit into tax havens each year, resulting in $245 billion (Sh26.7 trillion) in lost tax.
Another report released two years ago by America’s National Bureau of Economic Research (NBER) showed that super-rich nefarious Kenyan tycoons are hiding close to Ksh15 trillion in offshore accounts, an amount that can sustain Kenya’s budget for five years.
In the report, Kenya is mentioned among the top ten countries with high offshore wealth to GDP ratios.
“Among the countries that created a lot of shell companies one finds Jordan, Russia, Taiwan, the UAE, Venezuela, Zimbabwe and Kenya,” reads the report in part.
The tycoons, of whom most are politicians have shunned the state tax amnesty to declare the money and repatriate it, which was extended by Treasury CS Henry Rotich.
Most of these tycoons and politicians have been doubtful about the government’s offer, fearing for punitive action once the wealth has been declared and brought back.
In September, it was reported that KRA was unable to trace Ksh896 billion wired back into the country after the taxman offered tax amnesty to the owners of the money.
In March, KRA announced that 16,000 Kenyans had wired Ksh1.014 trillion back into the country from offshore accounts.
The government had offered the Kenyans a three-year amnesty window since 2016 to repatriate the billions tax-free. During that period, they would not required to declare the source of their wealth or even account for previous years’ tax arrears.
It is suspected that the money, most of it thought to have been stolen from public coffers, was wired back to offshore accounts immediately after being cleared by state.