Kenya’s announcement that it will tax the transfer of assets in the mining sector has been welcomed by The Africa Progress Panel (APP), an influential international policy think tank.
In a report entitled "Equity in Extractives: Stewarding Africa’s natural resources for all," the APP explains that international tax avoidance and evasion, corruption, and weak governance in many African countries means that natural resource revenues are widening the gap between rich and poor.
The panel said in a statement, "The Africa Progress Panel is convinced that Africa can better manage its vast natural resource wealth to improve the lives of the region’s people by setting out bold national agendas for strengthening transparency and accountability."
"The report therefore welcomes the commitment from the current G8 presidency, the UK, and other governments to put tax and transparency at the heart of this year’s dialogue."
Under the new law, introduced in February, a withholding tax of 10% will be imposed on gross value of shares or property transferred for the resident taxpayer, and 20% if the seller is a non-resident.
These taxes are expected to raise nearly KES300bn ($3.57bn) from individuals who obtain mining licenses for speculation purposes.
The government has also been campaigning to double royalty charges on mines from 3% to 6%, reports the Business Daily.
"Many of the countries in the early stages of developing their non-renewable resources, including Kenya and Tanzania, have greatly strengthened macroeconomic governance. They can learn from the mistakes of the past and take a different route," the APP said in its 2013 report.
Image: Kenya’s new mining taxes are expected to raise nearly $3.57bn from individuals who obtain mining licenses for speculation purposes. Photo: worradmu.