Kenya Joins Global Efforts to Combat Financial Secrecy

The Kenyan government has announced its commitment to implementing the Common Reporting Standard (CRS), a global initiative aimed at combating financial secrecy and tax evasion. As part of this effort, reporting financial institutions (RFIs) in Kenya will be required to review high-value accounts held by individual account holders who are residents of participating jurisdictions.

Overview of the CRS

The CRS is a global standard that requires financial institutions to report information about financial accounts held by individuals and entities in other countries. The goal of the CRS is to increase transparency and combat tax evasion by ensuring that financial institutions have access to accurate and timely information about their customers’ tax status.

Requirements for Reporting Financial Institutions (RFIs)

According to the regulations, RFIs must:

• Review high-value accounts held by individual account holders who are residents of participating jurisdictions
• Treat an account as a Reportable Account if it is held by an individual resident in a reportable jurisdiction and has an aggregate balance or value exceeding US$250,000
• Obtain a self-certification from the account holder to determine their residence(s) for tax purposes
• Review pre-existing entity accounts and treat them as Reportable Accounts if they are held by entities resident in reportable jurisdictions

Procedures for Financial Institutions

For new individual accounts, RFIs must:

• Obtain a self-certification from the account holder to determine their residence(s) for tax purposes
• If the original self-certification is found to be incorrect or unreliable, obtain a valid self-certification that establishes the account holder’s residence

For new entity accounts, RFIs must:

• Obtain a self-certification from the entity to determine its tax residence

Impact on Financial Institutions

The implementation of the CRS regulations in Kenya is expected to have a significant impact on the banking, custodial, depository, and insurance sectors. The global financial industry is expected to undergo significant changes aimed at increasing transparency and combating financial secrecy.

Contact Information

For additional information regarding this Alert, please contact Ernst & Young (Kenya), Nairobi:

• Francis Kamau
• Christopher Kirathe
• Hadijah Nannyomo
• Robert Maina
• David King’ori
• Stanley Maina
• Elizabeth Hellen
• Denis Maina
• Elsie Kimeli

Or visit the Tax News Update: Global Edition (GTNU) version of this Alert for a full listing of contacts and email addresses.