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Monitoring and Measuring Base Erosion and Profit Shifting in Kenya

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Mercy Mbithi, Kenya Revenue Authority (KRA)

Published in: Economy & Finance
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Monitoring and Measuring Base Erosion and Profit Shifting in Kenya

  1. 1. The herculean task of adding one plus one: Monitoring and Measuring Base Erosion and Profit Shifting in Kenya By MERCY M. MBITHI
  2. 2. Can Kenya own the process of BEPS? Monitoring and Measuring BEPS Level of engagement Ripple effect OWN THE PROCESS Resources employed
  3. 3. This far: • Transfer Pricing rules (2006) • Interest deductions limitation rules • Double Tax Agreements • Capacity building • BEPS Agenda
  4. 4. Indicators: 1. Foreign direct Investment (FDI) figures as compared to GDP’. 2. High profit rates of low-taxed affiliates of top global MNEs’ 3. High profit rates of MNE affiliates in lower-tax locations 4. Effective tax rates (ETR) of large MNE affiliates relative to non-MNE entities with similar characteristics 5. Concentration of royalty receipts relative to R&D spending 6. Interest expense to income ratios of MNE affiliates in countries with above average statutory tax rates
  5. 5. Limitation:
  6. 6. Mitigating factors: • Automation • Data Clean up (Tax payer Sensitization) • Additional Assessments • Data amalgamation/ collaboration/ consolidation • Research based Policy making
  7. 7. Limitation: • Skill Gap
  8. 8. Cross boarder transactions Research Technical element Partnerships Monitoring and Evaluation Implementation of Policies Tax policy reforms
  9. 9. Conclusion: Lets go back to the Basics

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