Publications > Tax

Report for Tax Justice Network-Africa and ActionAid-International (June 2012)

The government of Kenya is providing a wide range of tax incentives to businesses to attract greater levels of Foreign Direct Investment (FDI) into the country. Yet this study shows that such tax incentives are leading to very large revenue losses and are anyway not needed to attract FDI. Recent government estimates are that Kenya is losing over KShs 100 billion (US$ 1.1 billion) a year from tax incentives and exemptions. Of these, trade-related tax incentives were at least KShs 12 billion (US$ 133 million) in 2007/08 and may have been as high as US$ 566.9 million. Thus the country is being deprived of badly-needed resources to reduce poverty and improve the general welfare of the population. In 2010/11, the government spent more than twice the amount on providing tax incentives (using the figure of KShs 100 billion) than on the country’s health budget – a serious situation when 46% of Kenya’s 40 million people live in poverty (less than US$ 1.25 a day).

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Report for Norwegian Church Aid and Churches in Tanzania (June 2012)

This report analyses Tanzania’s tax policies and how much revenue the country is losing from tax evasion, capital flight and tax incentives. It shows that, every year, a vast amount of potential tax revenue that could be used to reduce poverty is failing to end up in the government treasury; much is simply leaving the country. Illicit financial flows from Tanzania – which entail the disguised expatriation of money abroad, usually to developed countries or tax havens – range from $94 – 660 million a year. In total, and including further revenue losses from tax incentives and various forms of tax evasion, the report estimates that Tanzania has in recent years been losing revenues ranging from $847 million – $1.29 billion (TShs 1.35 – 2.05 trillion) a year – thus the median figure is $1.07 billion (TShs 1.7 trillion).

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Report for Tax Justice Network-Africa and ActionAid-International (June 2012)

The government of Tanzania is providing a wide range of tax incentives to businesses to attract greater levels of Foreign Direct Investment (FDI) into the country. This study shows that such tax incentives are leading to very large revenue losses and may not be needed to attract and retain FDI. The report shows that, taking different estimates into account, revenue losses from all tax exemptions and incentives may be as high as TShs 1.8 trillion (US$ 1.23 billion) in 2008 and that the minimum revenue loss from tax incentives granted to companies alone is around TShs 381 billion ($174 million) a year (for the years 2008/09 – 2009/10). Thus Tanzania is being deprived of badly-needed financial resources for financing public expenditure of goods and services. If the public revenue lost through tax incentives were spent on education and health, the education budget would increase by more than a fifth and the health budget by more than two-fifths.

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Report for Tax Justice Network-Africa and ActionAid-International (April 2012)

The government of Uganda is providing a wide range of tax incentives to businesses to attract greater levels of Foreign Direct Investment into the country. Yet this study shows that such tax incentives are leading to very large revenue losses and are anyway not needed to attract FDI. Losses from tax incentives and exemptions amounted to around UShs 690 billion (US$ 272 million) in 2009/10 – nearly twice Uganda’s entire health budget.

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Report for Tax Justice Network-Africa and ActionAid-International (April 2012)

Governments in East Africa are providing a wide range of tax incentives to businesses to attract greater levels of Foreign Direct Investment into their countries. Such incentives include corporate income tax holidays, notably in Export Processing Zones, and reductions from the standard rate for taxes such as import duties and VAT. Yet this study, which focuses on Kenya, Uganda, Tanzania and Rwanda, shows that such tax incentives are leading to very large revenue losses for governments, are promoting harmful tax competition in the region, and are anyway not needed to attract FDI. In total, Kenya, Uganda, Tanzania and Rwanda are losing up to $2.8 billion a year from all tax incentives and exemptions. Not all these exemptions are bad, since some – such as VAT reductions – can help the poor. But much of the revenue loss is explained by tax incentives provided unnecessarily to attract foreign investment. These revenue losses are depriving countries of critical resources needed for reducing poverty.

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