A spirited debate emerged, centred around a viral video capturing acclaimed Kenyan band Sauti Sol, advising content creators to open offshore accounts to avoid being taxed by the current government.
Sauti Sol's lead singer, Bien-Aimé Baraza, allegedly advocated for offshore accounts to avoid the pitfalls of excessive taxation imposed through the Finance Act 2023.
Among the countries that the soulful group highlighted included Switzerland and Mauritius, renowned for progressive tax systems perceived to be much fairer.
"I advise all artists to get offshore accounts in Mauritius, Georgia, and Switzerland. Get paid internationally so that you cannot get taxed by this undeserving government," Bien, who appeared aggrieved by the government's digital tax targeting digital content creators, stated.
The video reignited a discourse about tax remittance, with sections of Kenyans seeking clarity between tax avoidance and tax evasion.
Speaking to Kenyans.co.ke, Ben Mulwa, governance and financial expert, warned that opening offshore accounts would be detrimental in the long run.
"Tax evasion remains illegal. It is every citizen's responsibility. If citizens are aggrieved, there are mechanisms provided in the Constitution, including picketing," Mulwa cautioned.
Reports allege that affluent Kenyans prefer offshore accounts to conceal their wealth. However, besides depriving the country of revenue, offshore banking increases regulatory scrutiny internationally and attracts significant expenses associated with maintaining overseas accounts.
The average price for opening an offshore bank account is around Ksh345,000, depending on the bank and jurisdiction. Some banks require a minimum deposit of Ksh69,000 while others can demand as high as Ksh69 million minimum investment.
"It's a small percentage, and the requirements are exclusive to the elite to hide their wealth. This is very unpatriotic and deprives the economy of giving their wealth to the improvement of the economy. (Offshore banking) is a complex system, and in the long run, is very detrimental to the economy," Mulwa explained.
To mitigate the influx of Kenyans opening offshore accounts, Mulwa advised the government to address grievances raised by Kenyans against tax hikes.
Mulwa attributed the uproar against tax hikes to the controversial Finance Act, 2023, which was recently suspended by High Court judge Lady Justice Mugure Thande on Friday, June 30, in the petition filed by Busia Senator Okiya Omtatah.
"The government needs to be focused on what it is supposed to do such as those grievances from Finance Act, 2023 which Kenyans feel defrauded."
"Government needs to match its appetite for collecting taxes with efficient service delivery. This quest for boycotting taxes can be detrimental. The only thing is holding the Kenya Kwanza administration to account," he pointed out.
Kenyans.co.ke's efforts to obtain a response from Sauti Sol's management team proved futile as calls and texts were unanswered.
Differences
Tax evasion refers to the use of illegal means to reduce tax obligations while tax avoidance means legally reducing one's taxable income.
In February 2023, Treasury CS Njuguna Ndung'u signed new rules granting the government unrestricted access to information on secret offshore bank accounts held by Kenyans in 106 foreign countries.
The CS confirmed that the move would aid investigative agencies in hunting tax dodgers and clamp down on beneficiaries of illicit wealth.
