Kenyan banks have initiated the sharing of information regarding foreign account holders with the Kenya Revenue Authority (KRA).
According to a local business daily, this is being done as part of the tax authority’s intensified crackdown on tax evaders and individuals benefitting from illicit wealth.
Several banks are said to have informed their customers that they had commenced implementing the Common Reporting Standards (CRS), a framework introduced by the Organisation for Economic Co-operation and Development (OECD) in 2014. This framework enables countries to efficiently exchange information on taxpayers, enhancing transparency and compliance measures.
By doing this, the Kenya Revenue Authority (KRA) is also expected to receive information concerning resident taxpayers holding accounts in countries that share reports using the framework, which includes all OECD countries and several more including South Africa and Ghana.
For individual account holders, banks will disclose details to the tax authorities such as:
- Account balance
- Address
- Place of birth
- Date of birth
- Country or countries of tax residence
- Identification numbers
In the case of corporate entities, banks are also required to collect and transmit information to the KRA regarding:
- The place of registration
- The entity type
- The details of the controlling person
In January 2023, Kenya signed the Tax Procedures (Common Reporting Standards) Regulations, 2023. These regulations mandate all Kenyan banks, trusts, and other financial institutions to report details of foreigners to the Kenya Revenue Authority (KRA).
The Kenya Revenue Authority (KRA) will subsequently share this information with 106 signatory countries, including well-known tax havens such as:
- Switzerland
- Panama
- The Cayman Islands
- Bermuda
- The British Virgin Islands
- Mauritius
- Jersey
- Monaco
In reciprocity, tax authorities in the other signatory countries are obligated to share similar information with the Kenya Revenue Authority (KRA). This mutual exchange strengthens the tax authority’s ability to access funds concealed in offshore accounts.
Similar to the anti-money laundering regulations that mandate financial institutions to report cash transactions exceeding KES 1 million (~$6,167) to the Financial Reporting Centre, banks are also tasked with reviewing all existing accounts holding balances above $250,000 (KES 40 million) belonging to foreigners.
In August 2022, the OECD approved the Crypto-Asset Reporting Framework (CARF) which provides for the reporting of tax information on transactions in crypto assets in a standardized manner, to automatically exchange such information.
So far, South Africa is the first African country known to have adopted the Crypto Asset Framework, having done this in November 2023.
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