Kenya has signed the multilateral convention to implement tax treaty related measures to prevent base Erosion and profit shifting convention at the ongoing 10th 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 to avoid paying tax.
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 disclosed.
By signing the international tax treaty, Kenya now becomes the 91st jurisdiction to join the Convention which covers over 1600 bilateral tax treaties and seeks to put an end to tax avoidance strategies that exploit gaps and mismatches in tax rules to avoid paying tax.
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 to put in place measures to 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, 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 US$100-240 billion in lost revenue annually, which is the equivalent to 4-10 percent of the global corporate income tax revenue.
JK/abj/APA