THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OF KENYA
(Established under the Accountants Act, Laws of Kenya)
Understanding tax evasion and tax avoidance: The link between tax evasion and money laundering / corruption
Date: 24th August 2023
Time: 04.00pm-06.00pm
Venue: Online
Overview
Tax is considered as a compulsory financial charge or some other type of levy imposed on a taxpayer by a government organization in order to collectively fund government spending, public expenditures or as a way to regulate and reduce negative externalities. Tax compliance refers to policy actions and individual behaviour aimed at ensuring that taxpayers are paying the right amount of tax at the right time and securing the correct tax allowances and tax reliefs.
The Kenya Revenue Authority defines tax avoidance as an action taken to minimize the amount of tax owed by a taxpayer hence maximizing after-tax income often through tax planning and utilization of loopholes in in tax laws and practices. On the other hand, tax evasion is defined as the illegal, deliberate attempt to obtain a tax benefit by intentionally subverting the rule of law to pay little or no tax.
World over, revenue collecting agencies have utilized a lot of resources to combat tax evasion. Over the years, this has been done through application of cutting-edge technology like introduction of systems in Kenya such as iTax and the Integrated Customs Management System (iCMS), to facilitate return filing and custom clearance as well as employing cargo scanners and trackers. These innovations have been instrumental in the fight against tax evasion that has seen a reduction of tax evasion incidences and a steady and gradual rise in tax revenue collections. The Kenya Revenue Authority has made tremendous strides in maximizing revenue collection and reducing loss through tax evasion. With Kenya being a regional hub for many multinational corporations, it is imperative to come up with mechanisms to clamp down on tax avoidance in order to reap the economic benefits of providing a favorable environment for multinationals to thrive and prosper. Many multinational corporations use their global presence to create intricate tax avoidance schemes to maximize their profits, to the detriment of host nations like Kenya.
It is not just multinationals that may engage in tax avoidance and considering the statistics referred above, it is highly likely that the numerous companies and individuals filing NIL returns and perennial credit filers may be engaging in some form of tax avoidance. Kenya may be losing millions or perhaps billions to tax avoidance but until the same is concretized by data, it remains speculation. Anyone unwilling to pay taxes will innovate crafty mechanisms to avoid paying tax. Therefore, the onus is upon the Kenya Revenue Authority to keep up with the schemes employed by individuals and corporations to reduce their tax liability. Being proactive by keeping abreast with emerging trends in the ever-evolving world of tax is important to help revenue collecting agencies effectively carry out their mandate.
The end goal of anyone engaging in either tax avoidance or tax evasion is to reduce and/or fail to pay tax. It is the means used to attain either goal that differs. Certainly, the line between the two is thin and almost non-existent. However, the same cannot be said about the efforts and resources employed to deal with tax evasion as have been deployed to deal with tax avoidance. The law imposes hefty fines against taxpayers who engage in tax avoidance. For instance, the Kenya Revenue Authority audit team must have a deeper and closer look at corporations’ operations and tax planning schemes to thwart these two tax errors that occasions low tax revenues.
Although corruption and tax evasion/ avoidance are distinct and separate problems, they can easily become intertwined and reinforcing. A society that is more corrupt may enable more tax evasion as corrupt officials seek more income via bribes; conversely, higher levels of tax evasion may drive corruption by offering more opportunities for bribes.
Individuals or businesses that engage in tax evasion may use various tactics to conceal their actions, including underreporting income, claiming false deductions, hiding assets offshore, and not filing tax returns. The penalties for tax evasion can be severe and may include fines, imprisonment, or both. One of the most significant issues in non-compliance with tax obligations is money laundering. Money laundering involves concealing the origin and amount of income, making it appear legitimate or erasing evidence of it altogether. This is often done by organized crime to launder their illegal income. Money laundering channels function as communication tools through which money can flow from one area to another. To combat money laundering effectively, a holistic approach is required that involves law enforcement agencies and anti-money laundering institutions working together.
This training intends to provide the delegates with critical knowledge and insights on tax evasion and tax avoidance and their link with vices like money laundering and corruption practices and how to proactively detect and effectively combat these practices.
Target Audience
This webinar will be useful to all professional Accountants and those aspiring to join the profession
Continuous Professional Development Units (CPD Units):
Members of ICPAK and reciprocating professional bodies will be awarded 2 CPD Units upon successfully attending the session.
Cost:
Charges for the training will be Kes 1,000/= which will cover workshop fees, materials, and e-certificates of attendance.
Online Booking:
We call on Seminar participants to note that booking for is available only online at www.icpak.com/events and will close two hours before the training session. Delegates are reminded to note that online booking for training sessions is mandatory. This is available either online at www.icpak.com/events or on the ICPAK Live – A smart phone-based application that is available from google store.
National Industrial Training Authority (NITA) Reimbursement:
The Institute is registered as a trainer with National Industrial Training Authority. The Institute’s registration number is DIT/TRN/47. Participants who are registered levy contributors should apply to NITA for reimbursement of their fees. Please note that this is applicable for Kenyan citizens only and subject to NITA regulations. Remember that to qualify you should apply to NITA for approval prior to the date of the conference. Further details can be obtained from their website (www.nita.go.ke)
