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Kenya can avoid foreign loans if rich individuals, corporates remit taxes honestly – report shows ▷ Kenya News

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– Jesuit report shows glaring inequality in sharing tax burden, with the poor bearing much of the weight

-It says most wealthy entities have hired well-paid tax lawyers, consultants and auditors to help them evade taxation

.- Report confirms KRA boss’ remarks that there is enough money locally that Kenya does not need to borrow loans

.- KRA has in recent days intensified crackdowns on billionaire tax cheats as it seeks to ensure fairness in taxation

Kenya could do without development aid if all wealthy individuals and major corporates were to remit their taxes to the government the same way ordinary citizens and small businesses do, a report has shown.

The report, dubbed Tax Justice & Poverty, corroborates recent remarks by Kenya Revenue Authority (KRA) Commissioner General Githii Mburu that there is enough money in the local economy that the country does not need to borrow loans.

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Building housing offices in Nairobi. Photo: Nation
Source: UGC

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The study, jointly conducted by the Jesuit missions in Kenya, Zambia and Germany, highlights massive inequality in the sharing of the country’s tax burden, showing how the poor continue to sustain the economy while corporate and private wealth holders continue to under declare their income and dodge taxation in the process.

“While there is transparency regarding earnings from dependent labour, e.g. via PAYE mechanisms, comparable transparency does not exist regarding the income of wealthy people which arises from different sources such as labour, capital, rent, dividends of business ownership etc,” the report states.

“As a consequence, a (relatively) higher tax burden rests on small and medium businesses and small and medium income holders, even upon poor people who cannot avoid paying VAT,” it adds.

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On top of lack of transparency regarding holders of private and corporate wealth, the study paints a picture of a well-oiled scheme put in place to avert detection.

“There is – secondly – an overwhelming comparative tax knowledge of highly paid specialists,namely tax lawyers, tax consultants and tax auditors engaged by and working for private and corporate wealth holders, which is compounded by chronic understaffing and lack of requisite equipment and militates against efficient and effective collection of tax revenues,” it reads in part.

The reality of growing tax evasion, the report states, is reflected in the low number of taxpayers officially in the millionaire bracket compared to the extremely high number of known dollar millionaires in the country and the moderate pace at which the national economy has been growing.

“After our research it is obvious that Kenya could do without development aid if they were able to tax justly and fairly that which is produced and owned in their own countries,” the report states.

To achieve this, it recommends that tax administration in the country needs to be strengthened and legal options available to tax officials improved.

Even more importantly, it says Kenya would need assistance from developed countries, for example, by receiving data regarding non-taxed assets hidden by private and corporate wealth holders.

“This would curb illicit financial flows leaving African states for developed countries; it would reduce corruption, since there would no longer be places to hide those assets,” the report reads.

This, it notes, would at the same time assist African states to gain financial independence, somany years after having obtained political independence, as was summed up by former KRA boss Michael Waweru with the famous slogan that “Kulipa ushuru ni kulinda uhuru” (to pay taxes is to safeguard independence).

KRA has in recent days intensified crackdowns on billionaire tax cheats as it seeks to ensure fairness in taxation

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