Kenya joins league of states with ICT giants on watch list
TAXATION: Kenya has joined the league of countries seeking to check the risk posed by multinational tech firms with regard to monopoly, taxation and data governance.
Led by the United Nations, the group seeks to ensure BigFintechs or big financial technology companies contribute to growth of markets where they make profits.
The move appears to target the likes of Facebook, Uber, Google, Amazon, Netflix, and Alibaba, among others, which have come under sharp criticism, especially with regard to taxation.
The firms make money in Kenya but they do not pay taxes. “One of the key recommendations of the UN Digital Finance taskforce is to catalyse international and corporate governance innovations to ensure BigFintechs benefit all,” the UN said in a statement.
One key area concerns the recent clash between Treasury and foreign tech multinationals that were opposed to digital taxation.
Kenya Revenue Authority (KRA’s) tax revenues are dropping due to tough times and the tax man sees online firms as a major source of cash to plug its shortfall.
Facebook is testing its payment services Facebook Pay in several countries and authorities fear it could usurp the power of regulators and monopolise payments.
When it was launched in Brazil earlier in the year, banks ganged up to push it out. Brazil’s central bank issued a statement ostensibly to support the banks.
“Digitalisation has been the silver lining in the dark cloud of the Covid-19 pandemic, but with opportunities come risks, particularly of market concentration by BigFintechs,” said Patrick Njoroge, Central Bank of Kenya Governor.
There are also concerns that the big fintechs could have a bearing on the monetary policy actions taken by respective regulators of subject nations.
Financial inclusion
The UN says these platforms have positive impacts - from deepening financial inclusion to creating livelihood opportunitiesto enabling direct citizen action -but also bring new challenges.
It adds that ride-hailing services create more air pollution than trips they displace, wages get suppressed as digital platforms scale.
Also, decisions made by e-commerce big players can impact hundreds of thousands of small and medium enterprises in other markets and cause data privacy breaches .
