Black money: Kenya urged to review double taxation treaties
LAUNDERING: Kenya has been urged to re-look at some of the existing tax treaties it signed with foreign countries if it stands a better chance of repatriating some of the black money – income illegally obtained or not declared for tax purposes – believed to be stashed abroad.
Further, the country’s leadership has been challenged to enter into Double Taxation Avoidance Agreements (DTAAs) with tax havens in order to crack down on tax evaders, prevent money laundering as well as other tax-related offences.
“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.
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He spoke during a recent virtual forum for tax justice advocates in Africa, themed, Tax Justice Advocacy: Increasing Participation of Civil Society Organisations (CSOs) and Journalists through Capacity Building whose aim was to empower the target groups with skills to identify, track, and report illicit outflows from the continent.
Double taxes
A DTAA is a tax treaty signed between two or more countries to help taxpayers avoid paying double taxes on the same income.
It becomes applicable in cases where an individual is a resident of one nation, but earns income in another.
The intent of Double Taxation Avoidance Agreements are ordinarily to make a country appear as an attractive investment destination by providing relief on dual taxation.
This form of relief is provided by exempting income earned in a foreign country from tax in the resident nation or offering credit to the extent taxes have been paid abroad.
