Press Release: Kenya must review Double Tax Agreement with Mauritius (02.11.2015)

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(Nairobi, November 2, 2015) – Kenya is teetering on the brink of financial meltdown with the implosion of at least two private commercial banks in the last few months and signing of loophole-ridden double taxation agreements with tax havens Mauritius, United Arab Emirates and Qatar.

Tax havens are countries or states that position themselves as low tax jurisdictions allowing companies and rich individuals to hide their wealth without paying appropriate taxes where they actually make their profits or wealth. Tax Justice Network-Africa (TJN-A) in October 2014 sued the Government of Kenya (specifically the Cabinet Secretary to the Treasury, Kenya Revenue Authority and the Attorney-General) challenging the constitutionality of the Kenya/Mauritius Double Taxation Avoidance Agreement signed in Port Louis, Mauritius on May 11, 2012 and as contained in Legal Notice 59 published in the Kenya Gazette of May 23, 2014.

The Agreement significantly undermines Kenya’s ability to raise domestic revenue to underpin the country’s development by opening up loopholes for multinational companies operating in the country and super- rich individuals to shift profits abroad through Mauritius to avoid paying appropriate taxes. For example, provisions under Article 11 of the Agreement relating to interest limit Kenya’s withholding tax to 10 per cent whereas the Kenyan domestic rate currently stands at 15 per cent. This will significantly affect the tax base of the Kenya Revenue Authority (KRA). The Agreement also sharply contravenes Articles 10 and 201 of the Constitution and is inconsistent with the principles of good governance, sustainability and accountability. The Agreement is open to abuse and this could endanger the growth and development of Kenya.

Three main reliefs sought by TJN-A are: that the High Court declares the government’s failure or neglect to subject the Kenya-Mauritius Double Taxation Avoidance Agreement to ratification in line with the Treaty Making and Ratification Act 2012 as a contravention of Articles 10 (a), (c) and (d) and 201 of the Constitution of Kenya.

That the Court directs the Cabinet Secretary for Treasury to immediately withdraw Legal Notice 59 of 2014 and commence the process of ratification in conformity with the provisions of the Treaty Making and Ratification Act 2012.  And award cost of the petition with interest against the Government of Kenya. The case came up for mention at the Nairobi High Court today, November 2, 2015. The court will fix a date for hearing the case on November 9, 2015. Speaking at a press briefing earlier today, the Executive Director of TJN-A, Alvin Mosioma said “there is need for public participation in the process of ratification of double tax agreements…double tax agreements kill the competitive edge of local firms”. 2 Senator Hassan Omar of Mombasa County who also addressed the press said Kenya’s “Parliament needs to appreciate its responsibility in safeguarding the public’s interests,” adding that “the reason people steal is because there is complicity and people are aware of it”. Provisions under Article 12 of the Agreement which relates to royalties also restrict at- source withholding tax to half (10 per cent) of Kenya domestic rate of 20 per cent. This will significantly weaken Kenya’s ability to raise revenue to finance its development. Additionally provisions under Article 20 of the Agreement reserves all taxation of “other income” not dealt with in specific Articles to the residence state.

This effectively reduces withholding tax to zero per cent on services, management fees, insurance commissions among others, whereas Kenyan domestic withholding tax rate currently stands at 20 per cent. This is a major gap that will lead to massive revenue leakages. The Agreement is neither United Nations nor OECD compliant and it also fails to address the issue of disposal of shares in companies. The Agreement effectively reserves under Article 13.4 all taxation of capital gains from selling shares in companies to Mauritius where the effective Capital Gains Tax is zero per cent. Under the Agreement foreign investors in Kenya can acquire Kenyan companies through Mauritius holding companies and Kenya cannot tax any of the gains when they sell these businesses again. This is open to abuse. Similarly, domestic Kenyan investors can dodge Kenyan taxes by round-tripping their investments illicitly through Mauritian shell companies. Kenyan companies can also easily avoid Kenyan taxes in dividends paid to foreign investors through devices like share buy-backs therefore deny the government of development funds.

The provision is very similar to the Capital Gains Tax Article in the India-Mauritius treaty which has proved very controversial costing India an estimated US$600 million a year in revenues as a result of tax avoidance and illicit round-tripping by Indian business executives driving the Government of India to initiate steps to renegotiate its agreement with Mauritius. Under the definition of ‘bilateral treaty’ in Section 2 of the Treaty Making and Ratification Act an ‘agreement’ such as the one between Kenya and Mauritius and which is the subject matter of this legal case, is a treaty subject to the Act and therefore requires that the Cabinet Secretary to the Treasury in consultation with the Attorney General, submit to the Cabinet the treaty, together with a memorandum outlining, inter alia – 1. Policy and legislative considerations, 2. Financial implications 3. Implications on matters relating to counties, 4. The views of the public on the ratification of the treaty.

Mauritius presently has tax treaties with 13 African countries namely Botswana, Lesotho, Madagascar, Mozambique, Namibia, Rwanda, Senegal, Seychelles, Swaziland, South Africa, Tunisia, Uganda and Zimbabwe. Apart from Kenya, Mauritius also has signed Double Taxation Agreements with Congo, Zambia and Nigeria. Currently Mauritius is negotiating DTAs with Algeria, Burkina Faso, Egypt, Gabon, Ghana, Malawi and Tanzania. Unlike Mauritius’ DTA with Uganda and Nigeria, for example, which have specific provisions for withholding tax for management/technical services fees, Kenya failed to negotiate any such provisions. 

In a related development, the Government of Kenya has signed an equally harmful Double Tax Agreement with United Arab Emirates and Qatar – both of which are tax havens – in which Kenya further deems its right to tax as unnecessary in a bid to attract investment from these two countries. These agreements will deepen Kenya’s current cash crunch by allowing the further erosion of the country’s tax base. – END.

ABOUT TJN-A: Tax Justice Network-Africa (TJN-A) is a Pan-African initiative and a member of the Global Alliance for Tax Justice. It is a network of 29 members in 16 African countries. TJN-A collaborates closely with these member organisations in tax justice 3 advocacy at the national and regional levels. TJN-A seeks to promote socially just and progressive taxation systems in Africa, advocating for pro-poor tax policies and the strengthening of tax systems to promote domestic resource mobilisation. TJN-A aims to challenge harmful tax policies and practices that favour the wealthy and aggravate and perpetuate inequality. For further enquiries, please email Kwesi Obeng at kobeng@taxjusticeafrica.net (+254 726 804 400) and/or Michelle Mbuthia at mmbuthia@taxjusticeafrica.net (+254 724 994 796).

First Nomination Day of the Presidential Aspirants in Uganda

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Today and tomorrow are the days where the stadiums will be filled for the nomination rallies in Uganda for before the General Election in 2016. This will be for Yoweri Kaguta Museveni (NRM), Amama Mbabai (Go-Forward) and Dr. Kizza Besigye (FDC). Even the businesses in central parts of Kampala are shut-down while people are going to Mbabazi’s Nakivubo stadium. It’s also been hectic and jams around Ntinda today. The Police have had check-points on the roads into the Nakivubo Stadium today! A strong police presence in Kampala is strong today!

Its election time so the NRM-Regime does something to the citizens they have actually given free fuel and free money before the Nomination Rally at Kololo Independence Ground today! Surely election season, things can sometimes become free!

Amama Mbabazi: “We are fully aware of the election obstacles in Uganda and we are going to overcome them”.

Yoweri Kagua Museveni extract from the recent speech to the NRM CEC 01.11.2015:

“I need to caution our members about branding each other ─ saying this, is “pro-Mbabazi” “pro-FDC”, etc. Ugandans know how to speak for themselves. Those who want to join Mr. Mbabazi can speak for themselves. Nobody else should speak for them. If they are acting as infiltrators, we shall discover them and deal with the infiltration”.

Mathias Mpuunga: “Enough is enough. 30 years is too long. We are here to assure you that we are ready for change” (…) “Opposition political parties, all regions of this country are going forward. We are going fooorward”.

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The crowds coming to Kololo and the NRM stadium has been shipped in with buses from Jinja Road from all over the country and also closed local schools in town to support the President.

Earlier today this has happen:

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Candidate Museveni duly nominated at 10.21 am, where he was with the Electoral Commission Chairman Eng. Dr. Badru M. Kiggundu hands him nomination certificate.

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Professor Venasius Baryamureeba has also been certificated the nomination for the Presidential Aspirant, and he got nominated at 12:00 Am at Makerere University Business School (MUBS). The Professor has himself thanked the Uganda Police Force for handling the crowd well today. Prof Barya said this today: “Today is when we begin a serious journey of beginning back our country Uganda to the right track”.

Earlier reported that Charles Lwanga has arrived and been at the Electoral Commission has been accepted for his nomination as a Presidential Aspirant.  But later reports tell that he failed to fulfill requirements and also have the bank slip with the 20 million fee for the candidacy. So he will surely not run this 2016-2021.

Information from the Electoral Commission:

There been totally 48 picked nomination forms, the total 12 returned forms, 10 satisfied requirements for nomination has gotten the nomination certificate.

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One of candidates who have now returned his Presidential candidacy is Nasser Ntege Ssebaggala the former Mayor of Kampala.

President Museveni said at the Nomination Rally today: “I request your vote to finish what I have started plus new development programs for the country”.

Amama Mbabazi says this: “I am happy I came after President Museveni this is how things are going to be”.

Iganga LCV Vice Forman Gabula Ezra defects from the NRM to the Go-Forward.  Acting DP Publicity Secretary Paul Kakande has deflected from the party to Go-Forward today and Lango elders vouch for the Amama Mbabazi as well. The Lango elders gave him a walking stick as a “sign of respect”, they gave him that the Nomination rally at the Nakivubo Stadium and even some Lango supporters gave him a spear.

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The NRM Youth leaders Omodo-Omodo and Adam Ruzindana are at the Amama Mbabazi Nomination Rally today. There is reported to be some leaders from the Conservative Party also represented at the venue today! Uganda Federal Alliance’s Betti Kamya was also present at the Stadium. People’s Progressive Party has said it has supported the candidacy for Dr. Kizza Besigye three times and that has been in vain. So they now endorse Go-Forward now! Asuman Basaliirwa of the Justice Forum (JEEMA) said: “JEEMA will back Amama Mbabazi for and are positive for 2016 and is time for Amama” (…)”The country has only one problem…Mister Museveni”.  Former Tooro Kingdom Prime Minister Hon. Stephan Kaliba has endorsed Go-Forward! Medard Lubega Segona the Buganda Information Minster claims today: “gives credit to Amama Mbabazi for pilling pressure on Museveni to return Buganda property”.  Jimmy Akena claims to be the UPC President at the JPAM rally.

While somewhere else is Olara A. Otunnu claims to be the President of the UPC.  So while this is happening, who is really running the UPC? We have known for a while about the split and Otunnu and Akena wings of the Party… but the introduction of both leaders as leader of the Ugandan People’s Congress is a bit tricky on a day like this! Olara A. Otunnu said this: “All those who want the change should come together and unite to be one. Unite with Amama Mbabazi”. Mira Matembe said that this the motto of the country has changed from “For God and Country” to “For my stomach and my family” she continues: “Even Mbabazi realized that things had changed for the worst, that’s when he gave it (Regime) up!” (…)”NRM simply uses and discards its woman and youth”.

Dr. Abdi Bwanika will launch his candidacy for Precedency tomorrow and launch his campaign at the Nsambya Sharing Hall.

Dr. Ian Clarke who has run as Mayor for Makindye, he is now officially running for MP.

Important Notice for 5th of November:

Eng. Dr. Badru M. Kiggundu the Electoral Commission Chairman has told the media that he will have meeting with the Presidential Aspirants and Candidates so they can harmonize their campaigns on the 5th November.

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There was rumored about the buses from the other parts of the country for getting NRM-Supporters to Kololo Independence ground and the Nomination Rally of Yoweri Kaguta Museveni today. The issue and reports now is that the same people does not have a de-tour or return buses from the NRM. So certain NRM supporters from Up-Country are stuck at and around the Kampala Central Police Station and Bombo Road. For the simple reason there is no official transport back to Lira, Gulu and Arua. This was from where they was shipped from to get to the venue and start of the Campaign for 2016 for Mzee.

Press statement from The Democratic Alliance (TDA):

“Hon. Amama Mbabazi was successfully nominated a presidential candidate today morning. He is currently addressing a mammoth rally at Nakivubo War Memorial Stadium. Go Forward is part of the forces of change under The Democratic Alliance (TDA)”.

This is interesting start to the official start of this presidential election in February 2016. Tomorrow is the others candidates start as official candidates.  As the big one tomorrow is Dr. Kizza Besigye.  And the other candidates that might have a clarity to run; even if we have a mighty big chance of the NRM-Regime to rig the coming elections in favor of Yoweri Kaguta Museveni and the NRM, then we shouldn’t be surprised. The thing we can see if there will calm and clarity and if the UPF will keep their heads cool! That is something to look forward to… see if they can achieve that.

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Official Program for Tomorrow:

NOMINATION PROGRAMME FOR COL. DR. KIZZA BESIGYE ON 04th NOVEMBER, 2015:

07.00 am SUPPORTERS ASSEMBLE AT DESIGNATED LOCATIONS

08.00 am PROCESSIONS START FROM NAJJANANKUMBI

10.00 am PROCESSION ARRIVES AT BANDA

10.30 am PROCESSION ARRIVES AT KIREKA

10.40 am PROCESSION ARRIVES AT BWEYOGERERE

11.00 am PROCESSION ARRIVES AT NAMBOOLE

11.00 am ARRIVAL OF FLAGBEARER AT NAMBOOLE

12.00 am FLAGBEARER LEAVES NAMBOOLE FOR NAKIVUBO STADIUM

01.30 pm ARRIVAL OF INVITED GUESTS

02.30 pm SPEECHES MADE BY THE LOCAL LEADERS

02.45 pm SPEECH BY THE FDC PARTY CHAIRMAN

02.50 pm THE LORD MAYOR GREETS THE PEOPLE

03.00 pm THE PRESIDENT CONSERVATIVE PARTY GREETS THE PEOPLE

03.10 pm SPEECH BY THE FDC PARTY PRESIDENT

03.20 pm FLAG BEARERS SPEECH

06.00 pm END OF THE RALLY AND ENTERTAINMENT

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Party Partisan media, really? Aga Khan is surely loyal to M7 🙂 Don’t think so while looking at that?

This is just so you know and this will be interesting. Peace!

For Immediate Release: Message to the Congress — Notification to the Congress on AGOA Program Change – Burundi (30.10.2015)

Burundi Report Police

TO THE CONGRESS OF THE UNITED STATES:

In accordance with section 506A(a)(3)(B) of the African Growth and Opportunity Act, as amended (AGOA) (19 U.S.C. 2466a(a)(3)(B)), I am providing notification of my intent to terminate the designation of the Republic of Burundi (Burundi) as a beneficiary sub-Saharan African country under AGOA.

I am taking this step because I have determined that the Government of Burundi has not established or is not making continual progress toward establishing the rule of law and political pluralism, as required by the AGOA eligibility requirements outlined in section 104 of the AGOA (19 U.S.C. 3703).  In particular, the continuing crackdown on opposition members, which has included assassinations, extra-judicial killings, arbitrary arrests, and torture, have worsened significantly during the election campaign that returned President Nkurunziza to power earlier this year.  In addition, the Government of Burundi has blocked opposing parties from holding organizational meetings and campaigning throughout the electoral process.  Police and armed youth militias with links to the ruling party have intimidated the opposition, contributing to nearly 200,000 refugees fleeing the country since April 2015.  Accordingly, I intend to terminate the designation of Burundi as a beneficiary sub-Saharan African country under AGOA as of January 1, 2016.

 

BARACK OBAMA

Press Release from the UPF: Use of Malicious Posters (02.11.2015)

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FDC’s Beatrice Anywar defends her decision to support Mbabazi (Youtube-Clip)

“As the largest opposition party, the Forum for Democratic Change prepares to nominate its presidential candidate, Dr Kiiza Besigye on Wednesday, some senior party members have jumped ship.  Kitgum Woman MP Beatrice Anywar and her Kampala counterpart Nabillah Naggayi Sempala have thrown their weight behind former Prime Minister Amama Mbabazi’s presidential bid. Anywar who is an FDC founder member told NTV that Dr. Besigye should respect the decision of the majority of members under the loose opposition coalition The Democratic Alliance, who endorsed Mbabazi’s candidature” (NTV Uganda, 2015)

Letter from KCCA to Hon. Amama Mbabazi – ED/KCCA/317/001 – RE: Permission to Conduct a Prossecion and Publicity Drives (02.11.2015)

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Uganda – Police warns Aspirants on negative publicity against competitors (Youtube-Clip)

http://www.youtube.com/watch?v=GHhp_i_R8Fs

Henry Kibalya exclusive on winning Minister Asuman Kiyingi (Youtube Clip)

http://www.youtube.com/watch?v=FIXhoAQAQ94

“After University, Kibalya worked as a banker but soon lost interest in the job due to its nature. He longed to interact with the masses on a daily. He tested the political waters in 2010 when he partook in the NRM primaries for Bugabula South, eventually losing to Asuman Basalirwa. He claims this race was rigged. He never sought court redress like most other losers. His trick was to be patient, something that has paid off, with him trouncing the same 2010 opponent and incumbent; Asuman Kiyingi. He now faces opposition candidates in the February 2016 elections. His campaign will hinge on tackling the high dropout rates in Kamuli and improving women and youth challenges in development.The sky appears to be the limit for Kibalya, who is one of the many surprises in this week’s primaries” (NBS TV)

FDC Statement: Updates on FDC/Go-Forward Talk (02.11.2015)

Besigye Amama

1. For the past two days we, (FDC and Go-Forward and group) have been holed up in a negotiation meeting in yet another attempt to try and agree on a Joint Presidential Candidate (JPC) for the forthcoming general elections.

2. Today many anxious FDC members and leaders kept on calling me and other members of our team to find out how we had gone. We had only one answer for them, “Please wait, we shall get back to you later”,

The following is an update of how far we were able to go:

I hope our members find it useful.
3. The otherwise very cordial meeting was adjourned about a few hours ago by co- chair Hon. Medard Sseggona sine die. The other co-chair was Augustine Ruzindana. Medard was proposed by GoForward while Augustine was proposed by FDC. The two teams were led by Dr Olara Otunnu and Maj. Gen. Mugisha Muntu respectively.

4. The meeting, which was a follow up of similar meetings held earlier in Nairobi and UK, had to be adjourned because we had once again reached an impasse. Both sides could not agree on a JPC.

5. Because of time element , given that Presidential nominations are due on November 3and 4, we agreed to move on and have the two candidates nominated while we continue the contacts and exploring possibilities of future cooperation most especially on vote protection and resisting partisan and unconstitutional police actions during the on-going electoral process.

6. When the negotiations hit a stalemate, FDC proposed alternative B as a fallback position; of both candidates testing the ground after nomination and then two sides meeting again to review the situation. The Go Forward team said they would to go back and consult on the proposal.

7. Both sides also agreed to focus efforts on our common political opponent, the rogue regime, and to stop attacking each other through unhelpful media wars.

8. Pushing for our candidate as a better option, FDC President Maj.Gen. Muntu argued that Dr Kizza Besigye who had been elected by the Party National Delegates Conference, had for 15 years demonstrated his consistence in the struggle for democracy, had a more popular appeal, has millions of voters and supporters behind him despite being rigged out of victory, has strong party structures behind him and was unlikely to suffer any more surprising state -trumped –up court cases.

9. Muntu argued that Besigye was therefore a better bet for the JPC and while he offered GoForward and the Parties backing candidate JP Amama Mbabazi the Executive Premiership plus 60% of cabinet positions. They said they had come to the negotiations with the mandate to secure the Presidency not anything else.

Written by the TDA Spokesman  Hon.Wafula Oguttu.