Kenya is considering tax relief measures to attract reluctant investors from the West. This week, Nairobi rolled out the red carpet for American investors even as the US government complained that corruption and lack of a transparent tax policy were discouraging interest in Kenya.
These issues emerged at the summit of the American Chamber of Commerce (AmCham) in Nairobi, where President William Ruto was among key speakers.
“My government is finalising new tax policy guidelines that have gone through various stakeholder consultations, including inputs from AmCham. This policy that will enhance transparency in our tax regime will take effect by June and will be in place for a minimum of three years,” President Ruto said.
He also revealed a plan by the government to scrap a 1.5 percent levy on digital services for the contentious global framework proposed by the Organisation for Economic Cooperation and Development (OECD) on taxing multinationals that includes a minimum rate of 15 percent.
While Kenya had been opposed to the framework proposing a 15 percent minimum tax rate on global firms, President Ruto has expressed a change in tone, which will see Kenya sign up to OECD pact ahead of its implementation on January 1, 2024.
“The growth of digital commerce has forced many countries to impose Digital Services Tax measures on income derived in their jurisdictions. Kenya has also done the same. Following discussions with players in this sector, we have committed to review this tax regime and align it with the two-pillar solution currently being developed by the OECD inclusive framework,” he said.
The new two-pillar plan aims to reform international taxation rules and ensure that multinational enterprises pay a fair share of tax wherever they operate.
Under the former administration of President Uhuru Kenyatta, Kenya withheld its backing for the global minimum tax rate, which would have seen the government pause collection of the digital services tax, currently charged at 1.5 percent of sales made, from tech giants such as Google, Facebook and Amazon.
Read more The EastAfrican
