KHRC demands revenue disclosures by multinationals to curb tax evasion

AI image of company executives analysing a finacial report.

The Kenya Human Rights Commission has demanded mandatory public revenue disclosures by multinational corporations, arguing that full transparency is the only way to stop aggressive tax practices that drain billions of shillings meant for public services.

The demand follows the Tax Appeals Tribunal's decision to dismiss an appeal by one of the multinationals and uphold a Sh1.76 billion tax assessment by the Kenya Revenue Authority (KRA), saying the ruling validates concerns it has raised for years about corporate tax abuse.

“This ruling matters not just for tax reasons, but because it confirms a problem we have raised repeatedly,” the commission said.

It said large multinational companies use “complex internal transactions to shift profits and reduce the taxes they should pay", hence denying KRA revenue meant to fund public services.

KHRC noted that the Sh1.76 billion could fund 1,760 public school classrooms, eight fully equipped county hospitals, nearly 29 kilometres of tarmacked road, more than 3,500 nurses or teachers for a year, or several rural and peri-urban water projects.

The commission said the comparisons demonstrate the direct consequences citizens suffer and what's lost when taxes are contested or avoided by companies or individuals.

“For years, ordinary Kenyans have been told to tighten their belts, pay more value-added tax and accept new levies on basic goods and services. However, some of the country’s largest and most profitable corporations continue to aggressively contest paying billions in taxes. This is unjust and unacceptable,” it said.

The tribunal’s findings, the commission added, confirmed that the KRA was right to question the multinational's related-party transactions and profit margins.

It said the outcome reinforces conclusions in its publication, Who Owns Kenya?, which links corporate tax abuse to widening inequality and underfunded public services.

“When revenue is lost through tax avoidance, children sit in overcrowded classrooms, patients go without medicine, and communities lack clean water, among other injustices,” the statement said.

“Corporate tax evasion weakens the state’s ability to deliver basic services and shifts the tax burden onto workers, small businesses and low-income households.”

Building on the ruling, the commission said it is now examining other corporations, with focus on the land they occupy, the terms of their leases and what they pay in land rates and taxes.

It warned that early findings suggest the scale of revenue loss could “shock many Kenyans”, particularly when households are already strained by pay-as-you-earn tax, value-added tax and rising levies on basic necessities.

To enhance transparency in tax obligation, the commission called on authorities to compel multinational corporations to publicly disclose, for every country where they operate, their revenues, profits, taxes paid, number of employees and assets.

It argues that such disclosures would make it harder to shift profits across borders and conceal the true tax base.

“It is time to put a stop to multinational corporations looting what rightfully belongs to the people of Kenya,” the commission said.

It further demanded that the National Treasury explain what concrete measures it is taking to hold more multinationals to account beyond isolated court battles.

It also urged the Kenya Revenue Authority to introduce annual transfer pricing audits in high-risk sectors such as agribusiness, extractives, manufacturing, energy and digital services and impose punitive penalties on tax evaders.

"Where aggressive tax avoidance is proven, penalties must go beyond recovery of tax and interest and include heavy punitive fines and possible criminal investigations."

The commission called for restrictions on deductions on related-party fees unless there is clear economic substance, and for the publication of the largest corporate taxpayers and major disputes to strengthen transparency.

In addition, it pressed for the creation of a public register of large landholdings linked to tax records, the challenging of treaty shopping through low-tax jurisdictions, and the denial of incentives or state support to firms with histories of tax avoidance.

Taken together, KHRC said these steps would ensure that companies benefiting from Kenya’s resources contribute fairly to the country’s development rather than shifting the burden onto citizens.