Kenyan citizens and firms increased their assets held in Switzerland by Sh3 billion in 2022 when they withdrew a substantial part of their portfolios to other tax havens.
The assets in Switzerland grew to Sh9.82 billion in the review period from Sh6.82 billion in 2021, according to the latest data from the Kenya National Bureau of Statistics (KNBS).
Switzerland is one of the world’s most popular tax havens, offering low taxes on foreigners’ income and strictly enforcing bank secrecy regulations, incentivising foreign nationals seeking to avoid or evade taxes in their jurisdictions of origin.
Tax avoidance involves legally minimising tax liabilities through such measures as investing in countries with low tax rates for foreigners.
Switzerland is ranked fifth globally among “most complicit in helping multinational corporations underpay corporate income tax,” according to the Tax Justice Network’s Corporate Tax Haven Index published in 2021.
The rise in Kenya’s assets in the country could be due to a mix of growth in the value of the portfolios and additional investments in the Central European nation.
Assets held in such countries by foreigners include savings accounts, equities, government bonds and property, all of which can be liquidated and repatriated.
While Kenya’s assets increased in Switzerland, they dropped in multiple other jurisdictions resulting in a decline in the total portfolios held in tax havens.
This indicates that some of the assets were repatriated to Kenya as well as to other countries not considered tax havens.
Mauritius, known for its low tax rates on foreign investors and extensive double taxation treaties, saw a 27 percent drop in assets held by Kenyans there to Sh19.8 billion from Sh27.1 billion.
It, however, remains the top tax haven for Kenyan investors, currently holding 3.8 percent of Kenya’s total assets abroad, and the seventh top destination generally.
Assets held by Kenyans in the Isle of Man, a self-ruling British territory located in the Irish Sea, also dropped by 25 percent to Sh11 billion, from Sh14.7 billion in 2021. The country is known for low tax rates and lack of a capital gains tax on returns from investments in the country.
The Netherlands, which ranks just above Switzerland in the Tax Haven Index, also witnessed an 18 percent drop in Kenya’s assets, from Sh2 billion in 2021 to Sh1.7 billion in 2022.
In total, Kenya’s assets in tax havens fell by 16 percent from Sh51.7 billion in 2021 to Sh43 billion in 2022.
The drop comes as the Kenya Revenue Authority implements the exchange of information agreement with 106 jurisdictions across the globe, among them the tax havens, allowing it unfettered access to information on assets held by Kenyans in those countries.