Kenya has signed the multilateral convention to implement tax treaty related measures to prevent base Erosion and profit shifting.
The signing took place at the ongoing tenth anniversary meeting of the global forum on transparency and exchange of information for tax purposes in Paris. The convention is the first multilateral treaty of its kind, allowing international collaboration initiatives to end tax avoidance among multinational firms under the OECD/G20 BEPS Project.
The project delivers solutions for governments to close the gaps in existing international rules that allow corporate profits to “disappear” or be artificially shifted to low or no tax environments, where companies have little or no economic activity.
Under the OECD/G20 Inclusive Framework on BEPS, over 130 countries are collaborating to put an end to tax avoidance strategies that exploit gaps and mismatches in tax rules.
Kenya’s Ambassador to France, Prof. Judi Wakhungu, signed the Convention at a ceremony held in Paris and witnessed by officials from the National Treasury and the Kenya Revenue Authority (KRA), a statement issued in Nairobi on Wednesday, 27 November 2019, disclosed.
By signing the international tax treaty, Kenya now becomes the ninety-first jurisdiction to join the Convention which covers over 1 600 bilateral tax treaties.
Speaking at the signing ceremony at the Organisation for Economic Co-operation and Development (OECD) headquarters, Prof. Wakhungu said Kenya’s signing of the Convention demonstrates the national commitment towards putting in place measures that Prevent Base Erosion and Profit Shifting (BEPS).
With the signing, Prof. Wakhungu further confirmed that Kenya would also be swiftly moving to deposit the country’s Instrument of Ratification for the Convention in coming months.
The convention, she said, will work to strengthen the existing international tax treaties network by ensuring that issues of treaty abuse are addressed whilst dispute resolution is strengthened.
This will, ultimately, ensure that Kenya gets her fair share of taxes from multinational firms operating in the country.
According to the OECD, BEPS practices cost countries between 100 and 240 billion dollars in lost revenue annually, which is equivalent to four to ten percent of the global corporate income tax revenue.