When The B Team Responsible Tax Principles were launched in February 2018, they aimed to raise the bar on how business approaches tax and transparency.
At the time, The B Team recognized that better tax policy and practice will not happen overnight. The Principles serve as a starting point for companies wishing to demonstrate a commitment to responsible tax. Implementation requires energy, resources and leadership.
Over time, The B Team Responsible Tax Principles have gained momentum and credibility. Importantly the Principles have become increasingly embedded within the 15 companies endorsing them. Each endorsing company has begun to demonstrate how the Principles are guiding their approach to responsible tax.
In a series of short case studies, The B Team will showcase some of the ways in which these companies are practicing the Principles. We begin with Safaricom PLC—a Responsible Tax Principles endorser that contributed to the development of the Principles and was one of the first signatory companies.
Safaricom’s work to promote a culture of tax compliance in Kenya
Safaricom adopted The B Team Responsible Tax Principles to show that it abides by both the spirit and letter of the law. As Kenya’s biggest corporate taxpayer, Safaricom both recognizes the vital role that it plays in the Kenyan economy and society more broadly and acts upon this by aligning its approach to tax with its commitment to the Sustainable Development Goals.
A key focus area for the company is tax compliance. Safaricom has a constructive professional relationship with the Kenyan Revenue Authority (KRA) and makes efforts to ensure that it complies fully with tax laws and provisions. In instances where the company’s tax position is not clear or may be subject to challenge, Safaricom engages proactively with authorities and further seeks third-party opinions from advisory firms.
In addition, Safaricom partners with the KRA in developing new technologies to promote compliance amongst Kenyan taxpayers. Based on the extensive penetration of mobile money services through the company’s M-PESA platform, Safaricom has created a mobile pay bill account for the KRA through which taxpayers can remit their tax payments using their mobile phone. The system is also integrated with the KRA’s online tax platform, i-Tax, which updates taxpayer accounts in real time. This digitization of payments has improved efficiency, simplified processes and enhanced convenience for taxpayers.
Safaricom goes much further than its own operations when it comes to compliance. The company ensures tax compliance more broadly by requiring its vendors—both existing and potential—to comply with tax laws. Specifically, tax compliance verification is required before the company engages procurement partners. Safaricom is proactively using its influence and its corporate policy to promote not just tax compliance in its supply chain, but a culture of responsible tax in Kenya.
Safaricom does not simply make these demands of its vendors—it supports them to ensure that a responsible approach to tax is in embedded in their processes. If the tax compliance of a vendor is in question, Safaricom partners with them to address the issue. The company also hosts forums for suppliers and partner agents‚ such as its mobile money partners, to raise awareness of its tax policies and promote tax compliance.
Safaricom knows that its approach to tax has a significant impact on domestic revenue collection—not just within the company, but throughout its broader ecosystem.
“As Kenya’s biggest corporate taxpayer, we understand the importance of tax compliance, and therefore we have a constructive working relationship with the KRA,” Vincent Opiyo, Safaricom’s Head of Finance Operations said on the company’s approach, “But we also know that we can support tax compliance amongst our vendors and partners – that is why we make compliance a requirement of the many companies we work with and why we support them to be responsible taxpayers.”
Safaricom endorsed The B Team Responsible Tax Principles to guide this approach to compliance, but has seen how its influence can reach beyond its own relationships with Kenyan tax authorities. Using the Principles as a foundation for action, Safaricom has been able to contribute to a fair, effective tax system in Kenya.
By working with peer companies, civil society groups, investors and more as part of The B Team’s Responsible Tax Working Group, Safaricom’s been able to evolve its approach and share its learnings with others—helping raise the bar on responsible tax well beyond its own practices.