CMA calls for tax amnesty to encourage new listings

Sunday April 22 2018

Capital Markets Authority chief executive Paul Muthaura. FILE photo | nmg

Capital Markets Authority chief executive Paul Muthaura. FILE photo | nmg 

By JAMES KARIUKI
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The Capital Markets Authority (CMA) has proposed introducing tax amnesty for companies intending to go public as it seeks to end a prolonged listing drought.

CMA chief executive Paul Muthaura said many companies were ready to list, but feared making past financials public as taxman will use the disclosures to penalise them.

Speaking during the 7th African Financial Markets Seminar for Africa’s 28 bourses, Mr Muthaura said the incentive could see more companies take up the amnesty but commit to maintaining good business practices on corporate governance front as well as make full tax disbursements as a sign of good corporate citizenship.

“What we have put forward in our proposal to the Treasury is introduction of tax waivers especially on taxes not paid in the past so that a lot of companies with that sensitivity can proceed to list, but with a commitment to become compliant going forward,” he said.

Nairobi Securities Exchange chief executive Geoffrey Odundo said the listing drought was occasioned by introduction of the capital gains tax in 2015, the 2016 global markets’ crisis and last year’s prolonged electioneering.

Africa Securities Exchange Association chairman Oscar Onyema said plans were afoot to have firms cross-list across Africa with six countries chosen to participate in the pilot phase.

An online platform will also be created for bourses in the six countries allowing cross-trading, giving African investors an opportunity to spread the risk.

Deputy President William Ruto urged the CMA and NSE to look at introducing products that support Kenya’s Big Four agenda in the next five years, especially the commodities exchange, derivative markets as well as the Real Estate Investment Trusts (Reit).