Finance Committee Commences Stakeholder Engagements Towards Streamlining Bilateral Tax Agreements
Treasury Cabinet Secretary Prof Njuguna Ndung’u with some of the parliamentary committee members
By PSCU
The Cabinet Secretary, National Treasury and Economic Planning, Prof. Njuguna Ndung’u, has called on the Departmental Committee on Finance and National Planning, to consider and approve the Multilateral Convention to Implement Tax Treaty Related Measures to prevent Base Erosion and Profit Shifting (MLI).
In a session led by the Committee chairperson Kuria Kimani (Molo) and which marked the commencement of stakeholder engagements on the matter, the CS took members through the content of the MLI, emphasizing that it is very important for Kenya to protect her tax base.
The MLI was developed in 2015 to modify existing bilateral agreements for the avoidance of Double Taxation (DTAs).
Kenya signed the MLI on 26th November 2019, and the Cabinet approved the ratification of the MLI, further directing the CSs for National Treasury and Diaspora Affairs, and the Attorney General, to take appropriate action.
The basis of the Countries developing the MLI was on the backdrop of governments losing substantial corporate tax revenue because of aggressive international tax planning, that has the effect of artificially shifting profits to locations where they are subject to non-taxation or reduced taxation. The MLI therefore strengthens international tax engagements, to prevent parties from avoiding tax.
To date, 102 jurisdictions have joined the MLI, out of which 85 jurisdictions have ratified, accepted or approved the MLI, and it covers around 1900 bilateral tax treaties.
The CS also notified the Committee that Kenya is trying to get out of the grey listing to favourable listing, on being an avenue for Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT), emphasizing on the need to exit the grey listing as fast as possible.
Some of the key interventions highlighted by the CS include completing the risk assessment that is going to provide us with the results in terms of how we are consistent with the requirements.
Further, the CS notified the lawmakers that Kenya has amended various laws, by introducing 17 amendments dealing with that treaty.
“The key steps we need to take is to look at the legal reforms, and how we take those 17 legislations to address technical compliance with enactment of those coming into force.” Stated Prof. Ndung’u.
Turning on to the National Tax Policy that the National Treasury submitted, the Chair Hon. Kuria advised Treasury to incorporate all resolutions that were passed by the National Assembly, and then propose amendments later on, to areas that they may have reservations on.
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