Wealthy individuals and foreign companies are taking advantage of weak systems to dodge taxes, costing Kenya billions of shillings every year.
This kind of shady money movement is what experts call Illicit Financial Flows, or IFFs. Simply put, it’s when money leaves the country illegally or unethically, without being taxed.
A new report by Auditor General Nancy Gathungu lays it all bare. Some foreign contractors come in, win big government deals, inflate costs, and then disappear without paying taxes.
Once they leave, the Kenya Revenue Authority has no way to follow the money or recover the losses.
When these firms dodge taxes, the government loses money. But the roads still need to be built. The hospitals still need medicine. The schools still need teachers.
So who fills the gap? You do. Every time you are hit with a new tax or higher cost of living, part of the reason is that someone else did not pay their fair share. That is unfair. It’s also unsustainable.
So what needs to happen? First, government agencies need to work together. KRA, Immigration, the Central Bank, the Assets Recovery Agency – everyone.
For example, immigration keeps records of foreign workers, but that data is not shared with tax of cers. That’s a missed opportunity.
Second, these agencies need stronger tools. They must track suspicious cross-border payments, freeze dirty cash fast and close loopholes that help people hide wealth.
Third, we need better laws and the courage to enforce them.
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Quote of the day: “The whole government
is a Ponzi scheme.” —American fraudster and
fi nancier Bernie Madoff, who committed the
largest fraud in US history, died on April 14, 2021
