Times Tower building in Nairobi, Kenya/ Courtesy.

NAIROBI, Kenya Jan 31- The Kenya Revenue Authority (KRA), the Ethics and Anti-Corruption Commission (EACC), and the Financial Reporting Centre (FRC)- which tracks money launderers- are now mining data from a registry of secret shareholders disclosed to the Attorney-General in a fresh crackdown on corrupt individuals and tax cheats.

The three government agencies have already started making requests for data from private companies. 

“We are starting to see requests from EACC, KRA and FRC utilising this information. By mid-last year we started seeing a few requests and they kept increasing towards the end of the year,” Registrar of Companies Joyce Koech said.

The move comes months after the State forced companies to reveal details including names, phone numbers, and residential addresses of investors who own more than 10 percent stake in the firms through secret accounts.

The changes in the Companies Act are aimed at revealing rich and influential business owners who choose to hide their identities behind trusts, foundations, and law firms to avoid scrutiny.

So far, 33 percent of 600,000 (198,000) private companies have made disclosures on their beneficial owners.

The disclosures are aimed at curbing tax evasion and illicit flow of money by revealing the true identity of investors owning large blocks of shares in both private and listed companies.

The Companies Act

Under the regulations, it is now mandatory for firms to reveal the identities of secret shareholders who control more than 10 percent of firms to the Attorney-General through the Registrar of Companies.

The details required for filing include names of the substantial shareholder, KRA Personal Identification Number, national identity card or passport copies, postal address, residential address, occupation, telephone number and the date when the investor became a beneficial owner.

The regulations stipulate that companies should stop paying dividends, block share transfers, and end rights for board appointments as well as voting power to substantial investors who fail to provide their particulars for forwarding to the State.

“We do not request blanket information about a certain transaction, but specific information against a certain individual linked to a KRA PIN,” KRA Commissioner for Intelligence and Strategic Operations Terra Saidimu said. 

Most high-net-worth shareholders at the NSE hold shares through nominee accounts, with the list of top 10 shareholders in a majority of blue-chip firms dominated by anonymous investors.

The disclosure of beneficial owners is increasingly becoming a global practice.

This followed the infamous ‘Panama Papers’ in 2016, which revealed high net-worth individuals such as politicians, use elaborate corporate structures- including nominee directors-  and offshore tax havens to hide beneficial owners.

“If we have a company registered abroad or a multinational … and it has a nominee person and they have declared a bill, we’ll be able to get information on that company in terms of transactions and we’ll link it with the declaration of taxes — whether it has been declared or not,” Saidimu added

The law bars companies from making public the personal details of the beneficial owners but opens the window for the KRA, security agencies and the FRC to tap the information.

This indicates the government’s keen interest in using this information to nab money launderers, corrupt individuals, and tax cheats.

The KRA enforcement unit has been using various databases to pursue suspected tax cheats, including bank statements, import records, motor vehicle registration details, Kenya Power records, water bills, and data from the Kenya Civil Aviation Authority, which reveals individuals who own aircraft.

Motor vehicle registration details are also being used to reveal individuals who are driving high-end cars but fail to remit their tax returns. 

Kenya Power meter registrations are helping KRA identify landlords, some of whom have been slapped with huge tax demands.

KRA has increased its efforts aimed at bringing more people into the tax bracket and curbing tax evasion aimed at meeting revenue targets that it has missed in recent years.