Nairobi International Financial Centre or Nairobi Tax Haven?







As the #EndTaxHavens week of action is blasting, Kenya and Africa are actually campaigning against the enactment of the Nairobi International Financial Centre (NIFC) Bill as in its present form, it presents the risk of functioning as a tax haven.

Tax Justice Network-Africa’s memorandum (pasted below) was shared with Kenyan MPs and was due to be read for the second time at the National Assembly yesterday.

Tax Justice Network – Africa (TJN-A), also published a report with the East Africa Tax and Governance Network (EATGN) and the Vienna Institute for International Dialogue and Cooperation (VIDC), titled “A Review of the Nairobi International Financial Centre. Nairobi International Financial Centre or Nairobi Tax Haven?”. You can read it here.

You can follow the discussion with #endtaxhavens and #nairobitaxhaven, and help TJN-A address their MPs:


Happening now: Engagement with policy bodies and CSOs on #NairobiTaxHaven

— #TJNAat10 (@TaxJusticeAfric) March 23, 2017



Let’s put a stop to #NairobiTaxHaven! If I pay taxes why should foreign companies be exempt from doing the same in MY country? #NotInMyName

— Njeri Mbuthia (@njerimbuthia) April 3, 2017

The NIFC Bill provides for 100% foreign ownership. How about the interests of the #KenyanCitizen ? #NairobiTaxHaven

— Leila K Kituyi (@leilakituyi1) March 23, 2017




The below mentioned organisations have analysed the Nairobi International Financial Centre Bill that underwent its First Reading at the National Assembly on 2 March 2017. We appreciate the opportunity to present the following recommendations to enhance the Bill for the benefit of Kenya:

  • Clause 36(2)(b) empowers the Cabinet Secretary to make regulations generally for the NIFC by permitting exemptions and incentives to NIFC firms. This allows the Cabinet Secretary to award tax incentives and concessions and encourages tax avoidance schemes which in effect will allow Kenya to lose large sums of revenue and threaten the competitiveness of Kenyan industries duly registered in Kenya. The loss of potential revenue also undermines the commitments and efforts made towards Domestic Resource Mobilisation which is particularly relevant with a deficit of KES 6.9 trillion for the year 2016/2017 (9.3% of Kenya’s GDP) and a debt of KES 3.2 trillion as at the beginning of the 2016/2017 financial year.

Recommendation: For public accountability and transparency any proposed tax incentive should also be subject to the approval of Parliament. Clause 36(2)(b) should be amended accordingly.

  • Clause 2 relating to Interpretation does not define “any business activity”, rather Clause 27 provides that the Cabinet Secretary may designate qualified activities by publishing in the Kenya Gazette. This provides the Cabinet Secretary with excessive powers to decide on what constitutes a business activity and limits regulation over preventing economic crimes such as money laundering.

Recommendation: The type of activities that will be permitted in the NIFC need to be specified. As the Centre is intended to realise Vision 2030, it should prioritise activities under the flagship projects of Vision 2030 such as the LAPSSET project.

  • Clause 3 of the Bill provides that this act shall prevail on all other existing laws. This is problematic as there are various legislation promoting transparency and accountability which relate to the Act which should not be superseded. Similarly Clause 32 provides for rights and benefits of NIFC firms including to (a) not be subject to any nationalisation or expropriation measures or any restrictions on private ownership and (d) be capable of being owned up to hundred percent by persons who are not nationals of, or resident in Kenya. Clause 32 is problematic for future administrations which will not be able to recant any expropriation measures effected by previous administrations. Further, if NIFC firms are not obliged to hire any Kenyan employees, this contradicts the government’s aim to create employment in line with Vision 2030.

Recommendation: Clauses 3 and 32 should be reworded to state that the provisions of this Act shall be without prejudice to the Central Bank of Kenya Act (CAP 491), the Proceeds of Crime and Anti-Money Laundering Act (CAP 423), the Access to Information Act (CAP 31 of 2016), Anti-Corruption and Economic Crimes Act (CAP 3 of 2003), Public Finance and Management Act CAP 18 of 2012, Banking Act (CAP 488), the Capital Markets Act (Chapter 485A), Prevention Against Terrorism Act (CAP 30 of 2012), International Finance Corporations Act (CAP 466) and other affected legislation.

  • Clause 7(1)(d) provides the Authority with powers and functions to review and recommend in consultation with the relevant agencies the development of legal, regulatory and institutional framework including mechanisms for judicial redress for the purposes of aligning them to the needs of the Centre. The preamble states that the Centre is intended to generate “high levels of national savings and investments” indicating that the rules being developed will be for the generation of savings and investments but does not provide for how its monies are spent.

Recommendation: It must be emphasised that the development of legal, regulatory and institutional framework should be developed in the public interest and likewise that the benefits should be used for the benefit of the Kenya public.

  • Clause 8 establishes the Board of the Authority which is comprised of six members including:
  1.           Chairperson appointed by the President;
  2.           Cabinet Secretary responsible for finance;
  3.           Cabinet Secretary responsible for international trade;
  4.           the Attorney General;
  5.           Four other persons with relevant experience in international financial services.
  6.           The Chief Executive Officer who shall be an ex-officio member with no right to vote.

These appointments are heavily influenced by the Office of the President who appoints the Chairperson (Clause 8(a) and who appoints all Cabinet Secretaries (under Article 152(2) of the Constitution) which in effect means that all members of the Board are either appointed by or associated with the Office the President thus limiting the independence of the Board. Likewise the establishment of the Steering Council under Clause 19 are by appointment by the President or Cabinet Secretaries, similarly inhibiting the independence of the Council.

Recommendation: Clause 8 should be amended to include representatives from the Kenya Revenue Authority and that the members of the Board are subjected to a vetting committee before being appointed and that the four other persons in Clause 8(e) represent the public interest.

  • Clause 10 relating to the conduct of business and affairs of the Board as set out in the First Schedule does not require a public record of each imposition, waiver or variation of tax or licensing fee to be submitted to the Auditor-General which is provided for in Article 210 of the Constitution and should form part of the Conduct of the Business and Affairs.

Recommendation: The First Schedule should be amended to require the Board to submit a record of each imposition, waiver or variation of tax or licensing fee to the Auditor-General.

  • While Clause 30(2) of the Bill provides that the Authority shall make public the register of all NIFC firms. It also states that it may not provide certain information relating to the firms public which it does not consider appropriate. Any restrictions to access to information should be in conformity with Article 35 of the Constitution and the Access to Information Act, 2016.

Recommendation: Clause 30(2) should be amended to read that it shall be without prejudice to Article 35 of the Constitution and the Access to Information Act.

  • Kenya is obligated to provide social services for its citizens, which resources are generated through predominantly income taxes (49%, Economic Survey 2016, p.105). The NIFC Bill negates Kenya’s opportunity for raising resources that may be applied for Kenya’s development, thereby contradicting several of Kenya’s policies and commitments including Vision 2030 under which vision this Centre is conceived. The Bill in its functions should clearly state and set out to encourage investment in line with domestic resource mobilisation for the betterment of sustainable development of the Kenyan citizenry.

Several provisions relating to the establishment of the NIFC also fall short of transparency and accountability provisions including the independence and accountability of the bodies established.

It is our humble submission therefore that the review of the NIFC Bill considers the above proposed amendments. We are available to present and provide further information as may be required.

East Africa Tax and Governance Network (EATGN)

Tax Justice Network – Africa (TJN-A)

National Taxpayers Association Kenya (NTA)

Kenya Debt Relief Network (KENDREN)

Inuka Kenya

Oxfam Kenya

Centre for International Trade, Economics and Environment (CUTS) International


Contact: Alvin Mosioma, Tax Justice Network – Africa

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