(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 firstname.lastname@example.org (+254 726 804 400) and/or Michelle Mbuthia at email@example.com (+254 724 994 796).
PLO Lumumba interesting as always! Right?
Ask ourselves! We should Ask Ourselves!
Interesting, right? Enlightenment, right?
There is for some strange reason a big discussion on the matter. Since some countries have them, some don’t. It is not like every constitution should be written the same with the same accords. In my homeland for instance there is no limit on how long the Prime Minister can sit in power, but that that depends if the people of my country get tired of the PM or the party affiliated with the PM. In bigger countries like the US there is a limit of two terms and only once a President who has broken that rule, was during Second World War and that was Franklin D. Roosevelt. Who had three terms and is the only one well known.
I am sure that Greece would have seemed happy with more often change of leadership. So if they hadn’t sunk that deep with loans and debt. Then it wouldn’t matter how long a regime is in power, if it essentially good, but if it’s not. Then it would be healthy with changes, so that the government recharge and fix the issues of old. That is for check and balance, also to stop cogging the machine with nepotism and local graft from local councils and smaller government entities.
Now that Democratic Republic of Congo (DRC), Rwanda and Burundi is following Cameroon, Equatorial Guinea, Sudan, Zimbabwe and Uganda. They have big-men who have been sitting for ages and continue to break a certain switch of leaders. Burundi has just been through a farce of a election that brought their President Pierre Nkurunziza to his third term. Paul Kagame in Rwanda is thinking the same. Paul Biya the President of Cameroon has ruled since 1982 and is still sitting comfortable. Teodoro Obiang Nguema Mbasogo has been the president of Equatorial Guinea has been in charge since 1979. Omar Al-Bashir in President of Sudan has been the chief since 1993. Robert Mugabe is the President of Zimbabawe is the big-men of the country since 1987. Yoweri Kaguta Museveni the President of Uganda has been the head honcho since 1986.
Have in mind Ben Ali in Tunisia, Hosni Mubarak in Egypt and Muammar Gadaffi in Libya. All of them had a hard fall during the Arab Spring. So during a short period of time these long times serving rulers was ousted by the public or militias in their countries. And those people mentioned that has been sitting since 1979 to now should have them in mind. They could be next.
Its reasons like this big-men why countries and constitutions, law and rule of laws should fix the longevity for the leaders of the countries. Even if some countries has benefited from leaders sitting long. There have been many who show other tales. That their starting and dealing with matters. Making sure that the countries are progressing, but the issue with all men, power can eat you and when it’s at your grasp you don’t want to leave it. The power corrupt and make sure your family eats and friends to. An leave the matters and supposed people your supposed to serve. That makes the basic issue of leaders who becomes the proof of states where there is “taxation without representation”. They goes from being heroes and big-men with legacy into Machiavellian and Orwellian monsters that swallows the governments, states and organizations. That evaporates and follows the pinpoints from the leaders, but not actual procedures or democratic values. Transparency does matters, checks and balance of information from the regimes dies down especially if it pokes at the government. Ethics of codes of conduct matters for the ruling party, but for the opposition is otherwise since they will be thrown into shackles and dungeons for standing up against the regimes.
There is a reason why media has to be strong against this leaders and big-men. Why term limits is a good thing? It’s because power corrupt and eat men. When you first get a spoon of the sweets they want the champagne and cocktails in the statehouses. While many of the big-men don’t strengthen the basic institutions and ministries of the countries they are in charge of. Instead they put more money into the security and armies, but not too strong because then they are worried that their general’s would make a coup d’etat, especially since some of them took power by the gun themselves. So they usually promise grand changes and grace periods where the institutions left soiling by former leaders. While they does certain things and necessary by them, if so only what needed and supported through aid or donor money they might do something more with this.
While these leaders also often toiled with multilateral organization that put strains on the economic freedoms and loans that funds the countries. The forced moves of liberate institutions instead of strengthen the powers of the nations. Free market thinking that has weakened the economies then making them stronger. So that they import more then they export. Produce simple raw material or farm products and import finished sophisticated products that give the budgets negatives for the countries and also a reason why the countries end up with loaning more money from the multilateral organization. Because of this the big-men make shady deals with international donor countries and producers that lead to more corruption. Their zealous and loyalist under-leaders get cuts and that happens as long as they follow the party lines. The sellers from abroad couldn’t care less because usually they get overpaid for the product and there wasn’t a fair process of the sale. So if there is a transparent overlook of the sale and ordering of the products to the country it wouldn’t have gotten a green light.
This thing grows and grows until it hit either the moon or the sun. The terms are what people looking at. Then you could have discussed and talked more directly about the countries that don’t have it. There isn’t like universal rules to how the constitutions should be and what countries should have in it. There is other ways around that countries has to follow the international agreements, resolutions, charters and convents they have to follow and make amendments to their existing laws. But that is whole other matter. The term limit question is more about the ethical place and trust in the big-men that is either elected or taken power on their own. And if you have issues with leaders taking power on their own, there is a slim chance of them actually caring about rule of law. Instead even if they say something they will turn against close to date of the final period of terms. Just like Yoweri Museveni did in Uganda, Pierre Nkurunziza did in Burundi, Paul Kagame in Rwanda and Joseph Kabila in Democratic Republic in Congo (DRC). They all did a turn-around in limited time right before the end of the official second term. So they could fix the laws and get an official third term.
We the people and the citizens care about our big-men and nations, about the institutions that are made to be around us and supposed to support us. As we want good leaders that actually lead and make changes, and structures to secure their people. Instead when their reign for so long that their stealing of wealth, lands and positions for loyalist can be vial and hurting the country, instead of reaching and making the place better. This could be less of a viable possibility if there were structures and codes into place that pushed leaders to leave behind a legacy and go off in grace instead of sitting into the man with a scythe coming and taking their souls to eternal rest.
If society fears that leaders will lead into nepotism, graft, corruption and other evils of long term stand still of leaders and philosophy. The journey that the political climate needs is sufficient tools to stand in rainy days and in glorious ones. Also proper training to lead the next generations into a secure place and leave a foundation that can bring something positive for the people and the nations as whole.
And it isn’t pure and true leadership if they aren’t coping with the ability of leaving the power. They know that and we the people know this. When that happens we see the issues translate into situations that nobody really wants to see. Like the failed Coup d’etat in Burundi in 2015 and the violence that has surged since. Then the failings of the ‘Walk to Work’ protest after the 2011 elections in Uganda. That only led to few fallen activists for the cause, but lead to now initial change. Also the reactions in the DRC after lawfully allowing it’s president a third term, this made people react and the #Telema uprising happened as a aftermath. This because the leaders don’t accept their reach and doesn’t step down in time, instead tries to sit until the chair is breaking. And in due time they will fall out of the chair, it’s just about how they will land and which legacy they want to leave behind.
I am Sure Honorable Mister Robert Mugabe of Zimbabwe could have been a real gentleman and been in the league of freedom fighters who fought a just cause against oppression of a foreign power. He could have been seen as that if he stepped down in proper time and given security to the country. Instead he has let the economy run loose, people fleeing the country, rigging elections, letting special army and police trained by North Koreans go into villages before elections and spread fear amongst the citizens. If he had stopped before turning into a villain, he could have been seen as hero. Something that would been worthy actually of how he fought with the comrades against a far-away rulers to secure peaceful nationhood to Zimbabwe together with Joshua Nkomo. Today he will not only be remembered only for the Lancaster House Agreement! But for all of the other madness that has happen after.
The same will happen with these other leaders who might have done great things. And they have made a difference. They have made some kind of changes and progress in their countries. Yoweri Kaguta Museveni of Uganda has made progress in Uganda. Even by sitting very-very long in the chair of power. After uncertainties of the 80s he has with the Movement system made the land peaceful and that has made gains in the aspect of food productions. Even with help of neighbors and the U.S. sent LRA on the run to C.A.R. where he is trying to get them again. Though with lingering into power it’s now taking a toll on the budgets, inflation levels, value of the currency and the enormous level of spending to local councils since there is new district every 5 years or so.
I could go on about every leader I have mentioned and what has happen because of their steadiness of power. How that effects and what that has led to in the countries that their leading, still. Similarities are still that the countries don’t earn much on having the same leaders reigning for many terms. Because the countries getting sucked into the system and patrons of the big-man instead of build functioning institutions and ministries to really developing the countries.
And let this be clear, I don’t want the systems of the West unto these countries that is not what I am implying. The simple thing I am pounding on is how it will be healthy for a nation to have leaders and their big-men for too long. I doubt if it is healthy. The same with MPS and Ministers, they all will eat too much and become fat, instead of serving the people. The same happens with the grand big-man; therefore the change of leadership is an essential feature to society and government.
Therefore what I am initially implying is that no matter what kind of society the human soul and body will be eaten by the power. That’s simple reason is that this is a universal issue, the location and countries could be a mayor in my town for the matter or the leader of European Union, the secondly it could be a president in South America or Asia. This is a phenomenon that is everywhere if the big-man has the possibility. Let me take a few more honorable mentions:
- Alexander Lukashenko has been the president of Belarus since 1994.
- Saparmurat Atayevich Niyazov has been the president of Turkmenistan since 1985.
- Nursultan Nazarbayev has been the president of Kazahstan since 1989.
- Issas Afweki has been been the president of Eritrea since 1991.
- Emomali Rahmon has been the president of Tajikistan since 1992.
- Hun Sen has been the president of Cambodia since 1985.
So thanks for reading. Hope it was worth it and that this wasn’t as long as the tenure of certain big-men. Peace.
ACCRA, Ghana–(BUSINESS WIRE)–Western Union Company (NYSE:WU, a leader in global payment services, today celebrated its 20th anniversary in Africa. With over 34,000 locations and connections to millions of bank accounts and mobile wallets in more than 50 countries and territories, across Africa, the Western Union network serves millions of senders and receivers with a choice of 120 currencies.
To celebrate this special milestone, Western Union’s President for Africa, Middle East, Asia Pacific, Eastern Europe and CIS, Jean Claude Farah, in addition to Aida Diarra, Western Union’s Regional Vice President and Head of Africa and other members of the Africa leadership team visited the first agent location at ADB (Agricultural Development Bank) that offered Western Union money transfer services for the first time in Africa in 1995. The WU leadership team also visited Ecobank head office in Accra and marked the occasion with the launch of the Account Based Money Transfer services through ATM in Ghana.
The Western Union 20th Anniversary celebration in Ghana in Africa, coincides with a speech made by President Barack Obama at the African Union Headquarters in Addis Ababa, Ethiopia, where he is quoted saying:
“Today, Africa is one of the fastest-growing regions in the world. Africa’s middle class is projected to grow to more than one billion consumers. With hundreds of millions of mobile phones, surging access to the Internet, Africans are beginning to leapfrog old technologies into new prosperity. Africa is on the move, a new Africa is emerging.”
Western Union is committed to the expansion and development of its pan-African network which provides a critical link to the ever growing African Diaspora living and working in countries around the world.
“More than 30 million Africans live outside their home countries, contributing billions of USD in remittances to their families and communities back home every year1”, said Jean Claude Farah. “We are very humbled to play a role in helping them move their money as they seek to elevate their economic status, meet emergency needs, support healthcare requirements, contribute to the education of future generations and in many instances build their own small businesses. By moving money for better for 20 years Western is enabling a world of possibilities for Africa and in Africa.”
Aida Diarra added, “Through the work we do we also enable economic activity and job creation. Currently over 155,000 Front Line Associates (FLAs) are employed in our agent network on the African continent. Western Union invests in training these FLAs developing their business, technical and compliance skills.”
In addition to the socio-economic impact that remittances enable, the company also supports philanthropic activities in Africa via the Western Union Foundation which has a long history of giving back to communities across the African continent. It supports organizations that promote economic opportunity and growth for individuals, families and entire communities throughout the region. Since its creation, the Western Union Foundation has committed to $8.703 million in grants and donations to 158 NGOs in more than 40 countries across Africa.
About Western Union
The Western Union Company (NYSE: WU) is a leader in global payment services. Together with its Vigo, Orlandi Valuta, Pago Facil and Western Union Business Solutions branded payment services, Western Union provides consumers and businesses with fast, reliable and convenient ways to send and receive money around the world, to send payments and to purchase money orders. As of March 31, 2015, the Western Union, Vigo and Orlandi Valuta branded services were offered through a combined network of over 500,000 agent locations in 200 countries and territories and over 100,000 ATMs and kiosks. In 2014, The Western Union Company completed 255 million consumer-to-consumer transactions worldwide, moving $85 billion of principal between consumers, and 484 million business payments. For more information, visit www.WesternUnion.com.
1 IFAD, 2009
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