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{
    "id": 1409826,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1409826/?format=api",
    "text_counter": 609,
    "type": "speech",
    "speaker_name": "Molo, UDA",
    "speaker_title": "Hon. Kuria Kimani",
    "speaker": null,
    "content": "Over the last ten years, there has been a growing concern about the use of tax avoidance strategies by multinational enterprises that exploit gaps and mismatches in national tax laws to shift profits to low or no-tax jurisdictions where there is little or no economic activity. This is referred to as Base Erosion and Profit Shifting (BEPS). In response to these concerns, the G20 and the OECD, together with many advanced and developing countries and regional tax bodies, have been working to develop new rules and processes to strengthen the international tax system and tackle tax avoidance. The result is a multinational instruments treaty that is being born today. This group of companies is referred to as the Inclusive Framework on BEPS, of which Kenya became a member in January 2017. It consists of 140 countries and jurisdictions. The inclusive framework has allowed Kenya to work on an equal footing with other countries to tackle tax avoidance by developing recommendations that are aimed at realigning taxation with the location where economic activity takes place and value is created. What is the rationale of MLI? The approval of this ratification on the multilateral instruments will put in place measures to curb double tax agreements, enhance clarity on taxation of partnerships to ensure that there is no evasion of taxes, make dispute resolution mechanism more effective, and broaden the tax base by ensuring that multilateral enterprises do not avoid taxation on the basis of their activities in the country. This has been done through avoidance of permanent establishment status. In addition, the ratification of MLI will improve Kenya's efforts to improve resource mobilisation for enhanced financing of the public sector and other development needs. In particular, MLI measures will ensure the protection of Kenya's tax base. This has especially given Kenya a high reliance on corporate income tax revenues in comparison with more developed countries. The MLI is by far a more prudent option than pursuing bilateral negotiations of Kenya's existing domestic DTAs, which would be lengthy, expensive and protracted processes. Negotiation of DTAs typically takes around 24 months. Kenya signed the MLI on the 26th of November 2019 and, thereafter, the Cabinet on 21st of March 2023 approved the ratification of the multilateral instruments. The difference between when Kenya signed the MLI and when the Cabinet ratified the same is a record four years. This shows the commitment of the Kenya Kwanza Administration in pursuing the recognition of Kenya in the global space as an economic leader. It is, therefore, no surprise that we have seen the United States Congress inviting His Excellency President William Samoei Ruto to address them because he has been at the forefront of marketing Kenya as an economic leader. This shows that when this administration came into office, it only took a few months before the ratification of this MLI which had otherwise taken a whole four years for its ratification. As of February 2024, 102 jurisdictions had signed the MLI while 85 had ratified it. If this House agrees with our Committee on the adoption of this Report, Kenya will be the 86th country to ratify this treaty."
}