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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Kenya Phase 2 Peer Review Report

This report for Kenya has been published on 14 Mar 2016. You can buy this report, or browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   New obligations were introduced in the ITA requiring nominees to provide beneficial ownership information to the KRA in the case of a change to this information. However, this requirement may not require nominees to have beneficial ownership available in all cases.  An obligation should be established for all nominees to maintain relevant ownership and identity information where they act as the legal owners on behalf of any other persons. 
Ownership and identity information may not consistently be available with respect to all settlors, trustees and beneficiaries of all trusts in Kenya.  Kenya should ensure the availability of ownership and identity information in respect of trusts in all cases. 
Phase 2 Rating Factors Recommendations
Largely Compliant.  In September 2015, Kenya enacted a new Companies Act which includes a provision prohibiting the issuance of share warrants to bearer by all companies.  Kenya should monitor the implementation of the new provisions in the Companies Act prohibiting the issuance of share warrants to bearer to ensure that full ownership information is available for all companies. 
While there is monitoring of ownership information obligations undertaken in Kenya by the tax authorities this may not cover all relevant entities. Further, although there is a system of monitoring with the requirements of the AML regime in place by the Central Bank, the scope of the AML regime is limited. Further, over the review period, the Registrar of Companies did not have a system of oversight in place to monitor compliance with ownership obligations and sanctions for non-compliance were not enforced in practice.  Kenya is recommended to improve its system of oversight in order to ensure that updated ownership information is being maintained in respect of all relevant entities. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.   Trustees of Kenyan trusts and foreign trusts are only statutorily required to maintain accounting records where the trust derives income subject to tax in Kenya.  Kenya should ensure that trustees of all Kenyan and foreign trusts maintain accounting records even where the trust derives income not subject to tax in Kenya. 
Phase 2 Rating Factors Recommendations
Largely Compliant.  Over the review period, although there was a comprehensive system of oversight in place by the tax authorities, this may not cover all relevant entities in Kenya. In addition, the Registrar did not have a regular oversight program in place to monitor the compliance of the accounting record keeping obligations under the entity acts.  Kenya is recommended to implement an oversight program to supervise the compliance with accounting record requirements to ensure that accounting records for all relevant entities are available in practice. 
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Of the 20 agreements signed by Kenya, 17 provide for exchange of information to the standard. Kenya needs to take the necessary steps to renegotiate the three DTCs which do not meet the standard.  Kenya should ensure that all its agreements provide for exchange of information to the standard. 
Of the 20 EOI agreements signed by Kenya, ten are in force. The ratification of EOI arrangements can take several years and is delayed on some occasions.  Kenya should ensure the ratification of all EOI arrangements signed with counterparts expeditiously. 
Phase 2 Rating Factors Recommendations
Largely Compliant.     
   
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.     Kenya should continue to develop its EOI network with all relevant partners. 
Over the review period, two jurisdictions requested to enter into an EOI agreement with Kenya. Kenya responded that as it would sign the Multilateral Convention and this would provide an EOI mechanism with both jurisdictions a separate bilateral agreement was not required. However, as of December 2015, Kenya had still not signed the Multilateral Convention.  Kenya should complete negotiations for an EOI agreement expeditiously when requested by partner jurisdictions. 
Phase 2 Rating Factors Recommendations
Partially Compliant.     
   
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Partially Compliant.  Over the review period, due to internal issues with the delegation of the competent authority power in Kenya, there were significant delays in the provision of information for the one request successfully received over the review period. In addition, status updates were not regularly provided.  Kenya should ensure that it communicates effectively with all its treaty partners, including the provision of requested information or where the information cannot be provided within 90 days, a status update should be provided in all cases. 
Over the review period, exchange of information operated on an ad-hoc basis in Kenya. Since January 2015, a formal EOI unit has been in place within the KRA. However, the EOI processes are largely untested in practice.  Kenya is recommended to closely monitor its newly implemented EOI Unit and processes to ensure it can effectively receive requests and provide all requested information in a timely manner.