Kenya: Flower growers face scrutiny over taxes once more
The alleged tax evasion comes in the form of a practice referred to as ‘transfer pricing’, in which local tax liabilities are kept down by way of inventive international service contracts and the shifting of profits to foreign-registered business entities. Whether those fiscal strategies amount to illegal practices seems to be at the center of the case.
Concerns by Kenya’s tax collector about the severe gap between the amounts of foreign exchange which the horticulture sector realizes and the actual tax revenues it reports have sparked the inspection.
“Companies in this sector with significant international transactions have been put under audit. Most of the multinationals in this sector have returned consistent tax losses and sometimes very little taxable profits,” KRA senior deputy commissioner for marketing and communications Kennedy Onyonyi explains.
The full extent of the fiscal machinations is still being assessed, but US-based international financial watchdog Global Financial Integrity has estimated the losses to Kenya’s coffers may well amount to an annual 11.5 billion Shillings (about 100 million euros).
Suspicions regarding a number of the flower firms operating in Kenya have existed for a while already. Investigations regarding tax evasion had in fact already been launched two years ago, as we reported in April of 2011.
Source: Business Daily Africa