Piece by: PAUL AMUKO

20 June 2023

• Bien sparked a heated discussion by advising local artists and content creators to consider opening offshore bank accounts to bypass the tax levy

• While offshore accounts offer potential tax benefits and international payment options, there are also challenges and reputational concerns to consider.

In a recent Instagram live session, Bien, a member of the renowned Kenyan band Sauti Sol, sparked a heated discussion by advising local artists and content creators to consider opening offshore bank accounts to bypass the tax levy imposed on their earnings in Kenya.

''Get offshore accounts and get paid internationally, muache kulipwa hapo kenya mkilipwa hapo Kenya you will be taxed by an undeserving government.'' Bien Aime

Bien argued that having accounts in countries like Switzerland, and Mauritius, among others would allow artists to receive payments internationally and avoid taxation by what he referred to as an "undeserving government."

Let us delve into the merits and demerits of offshore accounts, assessing their feasibility, potential benefits for Kenyan artists, and the implications for the country's tax collection and the overall economy.

The benefits of offshore accounts for Kenyan artists:

Tax optimization: Offshore accounts provide a legal means for artists and content creators to potentially reduce their tax burdens. By receiving payments in countries with favorable tax regimes, they can take advantage of lower tax rates or even tax exemptions, allowing them to retain a larger portion of their earnings.
International transactions: Offshore accounts enable artists to receive payments from clients and collaborators around the world with ease. It eliminates the need for complicated currency conversions and can provide access to a wider range of international financial services.
Asset Protection: Offshore accounts can offer enhanced asset protection and privacy. They provide an additional layer of security against potential legal disputes, creditors, or political instability in one's home country.

Challenges and feasibility:

Legal and regulatory compliance: Operating an offshore account entails adhering to complex legal and regulatory frameworks, both in the offshore jurisdiction and one's home country. Failure to comply with these regulations can lead to legal consequences and reputation damage.
High account maintenance costs: Offshore banking often involves higher fees for account setup, maintenance, and transactions. These costs can be significant, especially for individual artists and content creators who may not have substantial financial resources.
Reputation and public perception: There may be a stigma associated with offshore accounts, as they have been associated with tax evasion and money laundering in certain contexts. Artists considering this route must be prepared to face public scrutiny and potential backlash.
Accessibility and affordability: Establishing and maintaining offshore accounts may be more accessible to established artists and content creators with substantial incomes. It may pose a challenge for emerging talents or those with limited financial resources.

Impact on the Kenyan tax collector and economy:

Revenue loss: If a significant number of Kenyan artists and content creators adopt offshore accounts, it could result in a decline in tax revenues for the Kenyan government. This may impact the funding of public services and infrastructure development.
Enforcement challenges: Enforcing tax compliance among artists with offshore accounts may become more challenging for the Kenyan tax collector. It could require increased efforts to track and verify international earnings and transactions.
Incentives for reform: The adoption of offshore accounts by artists may serve as a wake-up call for the government to review existing tax policies and explore ways to create a more favorable environment for local artists. It could prompt discussions on the need for tax reforms that incentivize creativity and entrepreneurship.

Conclusion:

The suggestion by Bien of Sauti Sol to explore offshore accounts raises important considerations for Kenyan artists and content creators. While offshore accounts offer potential tax benefits and international payment options, there are also challenges and reputational concerns to consider.

Moreover, policymakers and tax authorities in Kenya may need to evaluate the impact of offshore banking on tax collection and devise strategies to ensure a fair and equitable system.

Ultimately, the decision to pursue offshore accounts requires a comprehensive understanding of the benefits, challenges, and ethical responsibilities involved.