An agreement signed between Kenya and the United States in Washington on August 6, 2014 has come back to bite after President Joe Biden demanded its enforcement as a condition to actualise a trade deal between the two nations.
Spy deal between Kenya and US comes back to haunt govt
Companies, wealthy investors that US wants KRA to spy on, in exchange for trade deal
The 2014 agreement obligated Kenya Revenue Authority to spy on US firms and American investors based in Kenya and report the same to US authorities.
President Biden’s government now wants Kenya to implement the tax agreement before a trade deal can be realised.
However, according to highly placed sources at KRA and Treasury, Kenya has been hesitant to implement the agreement for the last eight years.
The country is cautious of the backlash the tax agreement would cause from big firms and wealthy investors.
The KRA will be required to compile and disclose data on shipments, bank records, and income declarations related to US firms operating in Kenya, as well as to permit its personnel to testify in US courtrooms.
The taxman will also be obligated to confiscate and forfeit property belonging to US citizens who are linked to tax evasion and money laundering.
“Upon request, a Customs Administration shall exercise special surveillance of persons known to the requesting contracting party to have committed an offence or suspected of doing so, particularly those moving into and out of its territory” reads the agreement in part.
The US government wants the KRA to notify it of businesses that under report their tax obligations, particularly customs taxes as well as businesses whose conduct could endanger the security, economy, or other crucial interests of the US.
The tax agreement was signed during the last term of former President Barack Obama but was not given priority by the administration that followed led by former President Donald Trump.
The Kenya-US trade deal that has been pegged on enforcement of the tax agreement was also reviewed, replacing the inital deal signed with the Trump administration.
According to the US Commerce Representative's Office, the US and Kenyan governments will begin working within three months to build a plan for involvement in ten sectors, including agriculture, digital trade, combating climate change, trade facilitation, and customs processes.
The Trump administration began talks with Kenya in 2020 to reduce bilateral tariffs as part of the overall free trade agreement that Kenya has long desired with the US. However, the discussions were not resumed after Biden took over.
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