Tax authorities smile at the potential availability of previously inaccessible taxpayers financial data in Mossack Fonseca Data. In 2016, client data from the Panamanian law firm data Mossack Fonseca was leaked to German news organisation Suddeutsche Zeitung and other news organisations across the world in cooperation with the International Consortium of Investigative Journalists (https://panamapapers.icij.org/).
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The financial data leaks shook the financial world with governments investigating possible financial crimes and tax evasion by their citizens.
German Government Data Purchase
News in the media indicates that the German government has purchased 1.15 million documents that were acquired from the Panamanian law firm data Mossack Fonseca for an unconfirmed sum of US dollars 5.7 million. The documents have details of persons from around the world who were using the tax havens possibly for tax evasion and other financial crimes.
The Panama list had German national and other national. However, the German government paid the bill to acquire the information but it may not use the information alone.
The German government may assist other countries especially poor developing countries that cannot afford to purchase the information. The countries will have access to any details that they may require about their citizens.
This action by the German government means that the Kenyan government and other governments around the world whose citizens were mentioned in the document as using the tax haven will be able to get hold of the information. This information is useful in establishing tax compliance and potential repatriation of public funds previously taken out of the country.
Kenyan Taxpayers
This information will be used to establish whether the citizens have paid the necessary taxes (tax compliance). This should worry the persons mentioned in those reports because their governments will investigate them for tax evasion.
Kenyan taxpayers need to remember that from 2018 January the Kenya government will be able to access data of Kenyans in other countries for taxation purposes. This will be enabled by taking into the effect of the exchange of tax information agreements from January 2018.
The Kenyan government will be able to get any information about Kenyans from every country that will sign the exchange of tax information agreements. Kenyans may be overwhelmed by the current political campaigns for the Kenya national elections on August 8th 2017.
Tax compliance is still required as Kenyans campaign for the National elections on August 8th 2017 hotly contested between Jubilee and NASA. Jubilee party’s flag bearer is President Uhuru Kenyatta deputized by William Ruto and the main parties supporting Jubilee are KANU, NARC Kenya, Maendeleo Chap Chap, PNU etc.
NASA flag bearer is the opposition leader Raila Odinga deputized by Kalonzo Musyoka. The main parties supporting NASA are ODM, Wiper, Ford Kenya, ANC etc. There are other many political parties affiliated with the ruling party and the opposition.
Whichever person or political party that will win the August 8th general elections will form the next government. With a new government in place and exchange of tax information agreements in place, KRA will take action. Information will be available that will expose Kenyans that held and still hold bank accounts in tax havens. They will be investigated for tax evasion.
Way Forward
However, Kenyan citizens in the Panama paper can act when it is still early. This includes any other Kenyan who has previously or currently has money in the tax havens. The citizens should get in touch with the tax professionals (consultants, lawyers, auditors etc.) and establish the tax liabilities due including penalties and interests.
After establishing the tax liabilities, the taxpayers should approach KRA and start making the tax payments. In case the taxpayers do not have adequate money upfront, they can enter into a payment plan with KRA. Being pro-active will save the taxpayer extra tax payments in the form of fines, penalties and interests.
Tank you for reading the article.
Dr. Wakaguyu Wa Kiburi.
