[kictanet] MPs question Uber's 'small' Sh30 million tax payment in three years

[Ali Hussein]

Patrick

You raise an interesting issue. However that should not divert us from the
main point that Victor is making.

Are multi-nationals paying their fair share of taxes?

Here' an interesting story that is related to this.

Apple's tax headaches
<https://www.forbes.com/sites/kellyphillipserb/2016/08/30/apple-found-to-have-received-illegal-tax-benefits-ordered-to-pay-14-5-billion-in-back-taxes/#579b55995754>

This problem emanates from the Principle of  Transfer Pricing.
<https://en.wikipedia.org/wiki/Transfer_pricing> In a nutshell Transfer
Price is the *price* at which divisions of a company transact with each
other, such as the trade of supplies or labor between departments. *Transfer
prices *are used when individual entities of a larger multi-entity firm are
treated and measured as separately run entities. This is where it gets
interesting:-

So let's say Multi-National X has an operation in Kenya but all invoicing
is done in say Ireland (sound familiar for those who deal with
Multi-Nationals in the Tech Space?) but then the said Multi-National also
invoices itself (ok, its 'subsidiary') for 'Management Fees' and other
'expenses'. The ultimate effect is that profits declared are at a minimum.
And this practice is perfectly legal. :-)

In Apple's case they even went ahead and negotiated a minimum tax of 3%!!!

We are all equal..Except others are more equal..


*Ali Hussein*

*Principal*

*Hussein & Associates*



Tel: +254 713 601113

Twitter: @AliHKassim

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On Thu, Mar 23, 2017 at 8:05 AM, Patrick Mathenge via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> That's quite interesting. However, and with all due respect,if anyone was
> genuine and honest,  they would address and ensure that the taxes already
> paid are put into proper use in the first instance. Otherwise it's not in
> the interest of anyone to pay taxes that more often than not end up in a
> few people's pockets. Again I wouldn't speak am not speaking for Uber but
> that's just my very humble opinion, a tax paying Kenyan.
>
> Regards,
> Patrick
>
> On 23 Mar 2017 7:05 AM, "Victor Kapiyo via kictanet" <
> kictanet at lists.kictanet.or.ke> wrote:
>
>> Dear Listers,
>>
>> Parliament has questioned the small amount of tax paid by app-hailing
>> taxi firm Uber, suggesting that the bulk of the profits is repatriated
>> outside the country. The Kenya Revenue Authority (KRA) told MPs Tuesday
>> that Uber had paid Sh30 million in taxes since 2014.
>>
>> http://www.businessdailyafrica.com/corporate/MPs-question-
>> Uber-s-Sh30-million-tax-payment/539550-3858808-jc0mvaz/index.html
>>
>> Just how much do companies such as Uber, Google, Facebook, Twitter etc.
>> make from Kenya, and how much do they remit in taxes locally?
>>
>>
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> The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform
> for people and institutions interested and involved in ICT policy and
> regulation. The network aims to act as a catalyst for reform in the ICT
> sector in support of the national aim of ICT enabled growth and development.
>
> KICTANetiquette : Adhere to the same standards of acceptable behaviors
> online that you follow in real life: respect people's times and bandwidth,
> share knowledge, don't flame or abuse or personalize, respect privacy, do
> not spam, do not market your wares or qualifications.
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