A possible tax haven in Kenya: an analysis of the Nairobi international financial center act and its implication on base erosion and profit shifting
KAMAU, LAUREEN KABURA
African states are moving towards finding mediums to facilitate domestic resource mobilization in a bid to finance their development and stop relying on foreign aid. In light of this, Kenya intends to establish an International Financial Centre (IFC) in Nairobi to create a competitive regional financial services hub, which will stimulate both domestic and foreign investments. To support its efforts, the State enacted the Nairobi International Financial Services Act, which provides the legal framework that regulates the operations of the Centre to enable it to meet its expected goal.
The Kenyan government set out to establish a financial Centre in Nairobi through the Nairobi International Financial Centre Bill in 20161 that obtained the force of law and became an Act in 2017.2 The objective of the Act is to provide a legal framework to facilitate and support the development of an efficient and globally competitive financial services sector through the establishment of the Nairobi International Financial Centre (hereinafter NIFC) and the Nairobi International Financial Centre Authority. In creating the NIFC, the State believes that it will create more opportunities for domestic and international savings, attract more foreign direct investment into Kenya’s financial services sector, promote the export of international financial services from Kenya to the rest of Africa, create more employment and increase competitiveness of Kenyan enterprises.