Value Added Tax

This symposium organized by the AfronomicsLaw with the assistance of Monica Victor focuses on the synergies between taxation and the digital economy in Latin America and the Caribbean.

Enforcement of socio-economic rights in Kenya, with minimal success rate, has proven quite problematic. In almost all petitions on socio-economic rights, the government always pleads progressive realization, inadequate resources and the doctrine of separation of powers. Enforcement of socio-economic rights such as the right to adequate housing requires allocation of resources for their realization.

As the Covid-19 disrupts life as we know it globally and nationally, it will test to the core the ability of the state to defend its citizens from experiencing the most holistic crisis we have ever faced as a country. Kenya has lived through curfews, food shortages, economic difficulties but all at different stages and periods. With growth prospects reduced, lower than expected tax revenues, and Kenya’s debt to GDP levels is already in the doldrums.

the responsibility to build a nation rests upon its policy-makers, lawyers and accountants. It is a collective one. The next step is to bring all stakeholders to the round-table and contribute to the global tax system from a protectionist standpoint. The lure of subscribing to the global fiscal commons must be tempered with the need to protect the tax bases and revenue of the fiscal sovereign. The time to act is now and right.

African countries should consider alternatives to the arm’s length principle. A viable alternative to the arm’s length principle: the unitary taxation (formulary apportionment) approach should be considered. This approach looks in detail at the economic activities resulting into the profits of MNCs for tax purposes. Under this approach, tax authorities in Africa will justifiably impose corporate income taxes on “actual” profits of MNCs accruing form economic activities carried out in their jurisdictions, thereby eliminating the opportunities for base erosion and profit shifting in Africa.