Revelations that tax exemptions offered by Government to foreign investors to attract more business to the country are not achieving their objectives need to be investigated further.
A story carried in this paper details a study conducted by two organisations-the Tax Justice Network-Africa and Action Aid International, which shows the zero-sum game that results from tax exemptions to firms in Export Processing Zones (EPZ).
Most of these firms receive some sort of exemption from paying various forms of taxes.
But exactly what they must do, how much they must do and how much these efforts should count toward satisfying the criteria for tax-exempt status is anything but clear.
This ambiguity has led to open abuse of the process and there are reports that the country could be losing up to Sh100 billion annually as a result of these anomalies.
Further disclosure that tax exemption has done little to attract Foreign Direct Investment (FDI), which is the main reason why it exists, negates every reason for which this system was adopted.
The idea behind tax exemption is that it is in effect a subsidy granted by legislative grace to those companies rendering crucial services to the economy and that such exemptions relieve the firms of tax obligations that other taxpayers are obliged to assume.
But our system is too riddled with special interest loopholes. It absurd that a company like De La Rue, which makes billions by printing billions of money for us is a beneficiary of these rules.
The question is: Just how did De La Rue find its way here?
It is absurd that some companies that close shop on the ninth year are able to re-enter the country with new identities even after abusing the 10-year tax break accorded new investors.
Another question that begs for answers is: Who is licensing these phantom outfits to operate in our country?