INTERNATIONAL TAX: KRA-OECD In Talks Over Win-Win Digital Tax Regime.

As published on capitalfm.co.ke, Wednesday 26 January, 2022.

NAIROBI, Kenya Jan 26-The Kenya Revenue Authority (KRA) and the Organisation for Economic Co-operation and Development (OECD), Centre for Tax Policy and Administration, have commenced discussions on their collaboration on the Two-Pillar Approach by the Inclusive Framework and other areas of mutual interest.

As part of the implementation of the Two-Pillar approach, countries and jurisdictions commit to a standstill or withdraw measures such as Digital Services Tax (DST).

The deal that is expected to come into effect in 2024, has currently been consented to by 137 out of the 141 OECD Inclusive Framework countries and jurisdictions.

Kenya is one of the four countries that have not signed.

Other countries that have not signed include Nigeria, Pakistan, and Sri Lanka.

The meeting was a key step towards anticipating the possible benefits and concerns of the two-pillar international tax deal and also provided an opportunity to share the Kenyan experience of the Digital Service Tax.

“Kenya has welcomed the technical discussions on all aspects of the deal and will consider its position,” read a communique from KRA and OECD.

The OECD Inclusive Framework (IF) proposes a Two-Pillar solution to address the tax challenges of the digitalized economy.

Pillar One’s aim is to ensure fair distribution of profits and to allocate taxing rights to the countries with respect to the largest Multinational Enterprises (MNEs).

Pillar Two provides a global minimum corporate tax rate, with a proposal of 15% effective tax rate, that countries can adopt to put a floor under tax competition.

The meeting also discussed a number of other areas of cooperation that will strengthen the close partnership for instance the OECD will continue lending its support in the African Tax and Crime Academy.

During the forum, Kenya’s participation in the OECD Forum of Tax Administration was lauded as an important source of experience sharing that will be utilized in the ongoing digitalization and data governance process at KRA.

Further, it was noted that the implementation of the OECD Common Reporting Standards (CRS) are at an advanced stage and KRA committed to continue working with the OECD to ensure successful implementation.

Both parties agreed to continue pursuing multi-lateral and bilateral approaches towards the adoption of the two-pillar approach KRA and OECD commit to continue deepening their engagements for mutual benefit.

They will continue partnering to implement various initiatives to improve international tax standards and enhance tax transparency globally.

JERSEY: Jurisdiction to close…