Wealthy Kenyans Deny Country of Sh 6b in Taxes from Hidden Wealth

Wealthy Kenyans are hiding Sh457 billion in offshore accounts, denying the country Sh6.9 billion in tax revenue.

The hidden amount is enough to fund the annual budget for the 47 devolved units/counties of Sh386.6 billion and double the number of healthcare workers to help fight the COVID-19 pandemic.

According to the State of Tax Justice 2020 report, the amount stashed in low tax territories equals 4.8% of the country’s Gross Domestic Product (GDP).

The report released by Tax Justice Network and Global Alliance for Tax Justice indicates that Kenya’s financial sector is among the 30 most secretive globally and second in Africa after Algeria.

While saving wealth in offshore accounts is not a crime, the report points to the country’s high secrecy index that provides leeway for illicit financial flows that has seen the Kenya Revenue Authority (KRA) lose close to Sh7 billion in taxes.

Although Kenya’s Financial Secrecy Index (FSI) has dropped slightly from 80% in 2018, the global ranking has risen to position 23 from 27.

“Although the country’s share of the offshore world is not large, it has increased since 2018 and is set to increase further as the government positions Nairobi as the latest international financial center in Africa,” the report reads.

Furthermore, the report ranks Kenya among victims of global tax abuse especially by multinationals, losing Sh54.7 billion annually or 4.5% of tax revenue collected.

The amount according to the study is 36% of the county’s health budget and is enough to hire 240,781 nurses.