The Kenya Revenue Authority (KRA) and the Organisation for Economic Co-operation and Development (OECD), Centre for Tax Policy and Administration (CTPA), held cooperation and partnership meetings to discuss collaboration on the Two-Pillar Approach by the Inclusive Framework and other areas of mutual interest.
The meetings were held on 24th to 26th January 2022, in Kenya, and were led by KRA Commissioner General Mr. Githii Mburu and the Director of the OECD’s Centre for Tax Policy and Administration Mr. Pascal Saint-Amans.
The OECD Inclusive Framework (IF) proposes a Two-Pillar solution to address the tax challenges of the digitalized economy.
Pillar One’s aim is to ensure fair distribution of profits and to allocate taxing rights to the countries with respect to the largest Multinational Enterprises (MNEs).
Pillar Two provides a global minimum corporate tax rate, with a proposal of 15% effective tax rate, that countries can adopt to put a floor under tax competition.
As part of the implementation of the Two-Pillar approach, countries and jurisdictions commit to standstill or withdraw measures such as Digital Services Tax (DST).
The deal that is expected to come into effect in 2024, has currently been consented to by 137 out of the 141 OECD Inclusive Framework countries and jurisdictions.
Kenya is one of the four (4) countries that have not signed. Other countries that have not signed include Nigeria, Pakistan, and Sri Lanka.
The meeting was a key step towards anticipating the possible benefits and concerns of the two pillar international tax deal.
The meeting also provided an opportunity to share the Kenyan experience of the Digital Service Tax.
Kenya welcomed the technical discussions on all aspects of the deal and will consider its position.
The meeting was attended by KRA Commissioners, an OECD Secretariat team and experts from the National Treasury and Ministry of Foreign Affairs.
