The Kenya Revenue Authority has signed an international memorandum of understanding on tax collaboration with Botswana, to provide administration assistance from next year.
Tax officials from Kenya and Botswana on Thursday agreed to the assistance project that marks the first South-South cooperation pact under the Tax Inspectors Without Borders programme (TIWB).
In the plan, experts from KRA will provide technical assistance on audits of multinational enterprises to their counterparts in the Botswana Unified Revenue Service (BURS).
The TIWB was launched in July 2015 by the Organisation for Economic Cooperation and Development (OECD) and the United Nations Development Programme (UNDP).
KRA’s Commissioner for Domestic Taxes Benson Korongo said the capacity-building initiative is a key step towards enhancing revenue mobilisation in Botswana, as many countries in Africa continue to attract multinational investors.
“Revenue mobilisation is usually undermined by transfer pricing, which accounts for up to 60 per cent of financial outflows and most developing countries have no capacity to tackle this complexity. This has made most developing countries exclusively depend on developed countries for help, hence increasingly burdening them over time,” said Mr Korongo.
“We are happy to be the first developing country to extend help as an alternative to traditional sources of expertise as an inaugural South to South cooperation.”
The new Kenya-Botswana cooperation agreement was announced during a seminar on domestic revenue mobilisation on the side-lines of the 2nd High-Level Global Partnership for Effective Development Cooperation meeting in Nairobi.
KRA which has a fully-fledged Transfer Pricing unit will now deploy qualified tax experts to Botswana to provide assistance with ongoing audits of multinational companies.
The TIWB programme focuses on revenue recovery and improving local audit capacity while strengthening tax compliance in partner states.
“The challenges of building fair, effective and efficient tax systems that can deliver the resources needed to meet the UN Sustainable Development Goals are far bigger than any one organisation,” said OECD Secretary-General Angel Gurría.