Kenya occupies position 63 out of 70 jurisdictions globally, complicit in helping multinational companies underpay corporate income tax. According to a report dubbed Corporate Tax Haven Index (CTHI 2021) by the Tax Justice Network Africa, the country is responsible for 0.14% of the world’s corporate tax abuse risks.
The study shows that Kenya has a Corporate Tax Haven Index (CTHI) value of 62, which shows that its laws and position in the global economy combine to form a relatively low risk of corporate tax abuse by multinational. The country has a global scale weight of 0.013. The Global Scale weight measures how much financial activity from multinational corporations a jurisdiction hosts.
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Further, the country has a haven score of 49.7%, which measures how much scope for corporate tax abuse the jurisdictions’ tax and financial systems allow.
The State of Tax Justice 2020 report shows that Kenya loses $565.8 million in tax to global tax abuse, totalling to up to 4.45% of its current tax revenue. Out of the total tax loss, $503.5 million is lost through cross-border corporate tax abuse, as organizations avoid paying taxes. Multinationals manipulate loopholes in transfer pricing regulations, a significant revenue leakage area, to repatriate profits in their home countries.
Other jurisdictions in Africa among the top 70 list include Mauritius (15), South Africa (45), Seychelles (49), Botswana (59), Tanzania (65), and Gambia (69). The British Virgin Islands, Cayman Islands and Bermuda are the top three corporate tax havens at 6.4%, 6% and 5.7% of corporate income tax abuse, respectively.
