Banks start sharing customer data, balances with KRA
Banks start sharing customer data, balances with KRA in the purge against tax cheat and beneficiaries of illicit wealth
Banks start sharing customer data, balances with KRA in the purge against tax cheat and beneficiaries of illicit wealth.
The Kenya Revenue Authority (KRA) has begun receiving information from banks regarding foreign account holders as the taxman intensifies his campaign to root out tax evaders and recipients of illicit wealth.
Some banks informed their clients on Thursday that they had begun putting the common reporting standards (CRS) into practice, which allows nations to easily exchange taxpayer data.
Similar information about a resident taxpayer with an offshore account is anticipated to be sent to the KRA as well.
Banks will provide tax authorities with information about specific account holders, including account balances, addresses, dates and places of birth, countries of residency for tax purposes, and ID numbers.
In the case of corporate entities, banks are also expected to collect and forward to the KRA information on the place of registration, the entity type, and the controlling person.
In January last year, the Treasury Cabinet Secretary signed the Tax Procedures (Common Reporting Standards) Regulations, 2023, which require all Kenyan banks, trusts, and other financial institutions to report foreigners’ details to the KRA.
The KRA will then share this information with 106 signatory countries—including popular tax havens such as Switzerland, Panama, the Cayman Islands, Bermuda, the British Virgin Islands, Mauritius, Jersey, and Monaco.
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The tax authorities in the other signatory countries are in return required to share similar information with the KRA, enhancing the taxman’s chances of getting its hands on cash hidden in offshore accounts.
Banks are expected to review all existing accounts with balances of above $250,000 (Sh40 million) belonging to a foreigner.
However, tax experts caution that banks and the KRA walk a tightrope in safeguarding customer confidentiality in line with the Data Protection Act.
“Further, the CRS requires participating authorities to have data safeguards in place and I think this is what the Data Protection Act resolves,” said Robert Waruiru, a partner at Ichiban Tax & Business Advisory LLP, adding that the EU tax residents will be subject to the much more stringent EU data regulations.
Being a signatory to the CRS, Kenya hopes to lift the veil on assets held by Kenyans abroad, especially companies and individuals that have set up shop in low-tax jurisdictions.
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