President Uhuru Kenyatta led Kenya to reject a push by US President Joe Biden to introduce a global minimum rate of tax on multinational companies.
The agreement would have limited Kenya from collecting taxes from tech giants such as Google, Facebook and Amazon.
A report by the Organisation for Economic Cooperation and Development (OECD), indicated that Kenya was missing from the list of 136 countries that supported the agreement by Biden.
Kenya was uncomfortable with clauses in the agreement that would have forced the taxman to cut the digital services tax on 1.5 per cent of sales.
Nairobi stated that backing the agreement would also put at risk the collection of other taxes from multinational companies that have set bases in the country.
The proposed 15 per cent tax on multinational companies was an essential step in controlling corporate tax avoidance.
The deal was hailed for having the potential to curb tax avoidance by corporations that move their operations to countries with lower tax rates to avoid paying taxes.
Countries that signed the agreement are obliged to withdraw their unilateral measures such as digital services tax which Kenya introduced in January 2021, and similar measures imposed on non-resident companies which do not have a physical presence in the market jurisdiction.
The taxman stated that they expect to collect up to Ksh13.9 billion in revenue in the next three years from the digital tax and supporting the proposal would have hindered collecting other taxes from multinational companies.
Kenya, Nigeria and Algeria are among the African giant economies that are yet to back the deal.
This comes as President Biden is expected to hold talks with President Kenyatta in Washington on Thursday, October 14.
The meeting at the White House will mark Biden's first as president with an African Head of State.
