TAXPAYER INFORMATION EXCHANGE AGREEMENTS

What is a Tax Information Exchange Agreement (“TIEA”)?

A Tax Information Exchange Agreement is a bilateral agreement that has been negotiated and signed between two countries to establish an official system for the exchange of information relating to taxes. More specifically, a TIEA allows for the free exchange of financial tax information irrespective of differences in either country's requirement or definition of a predicate crime to money laundering. However, it must be duly noted that  information will only be provided if a proper request is made pursuant to all of the treaty provisions, which require that the requesting party first make a prima facie case.Countries may narrowly tailor the conditions that would trigger the requirement to exchange information, and restrict the categories of data that would have to be transferred.

It is likely that Kenya will use the OECD MODEL TIEA  which will provide   wide ranging powers to request for taxpayers records, bank account information and beneficial  ownership information such as behind nominees and beneficiaries. It also allows KRA to interview persons from another country or attend tax investigations being conducted by tax authorities of the other country.

The TIEA Initiative if properly implemented has the potential to reduce tax losses from cross border related party transactions.

The purpose of this Agreement is to promote international co-operation in tax matters through exchange of information.

Designed to increase transparency and ensure fair competition among financial centers worldwide