Kenyans living abroad seek to wire Sh119 billion back home
More than 3,000 Kenyans with cash stashed abroad have applied to repatriate Sh118.8 billion under the tax amnesty announced by Treasury in 2016.
According to a report released yesterday by the Institute Certified Public Accountants of Kenya (ICPAK), 3,523 Kenyans in the Diaspora have heeded to the call to wire the money into the country under relaxed terms.
The amnesty period initially ran from December 31, 2016, to June 30, 2018, but was later extended to June 30 this year.
“As at the time of the study and end of the amnesty period, there were 3,523 applications awaiting to be processed by Kenya Revenue Authority (KRA) amounting to Sh118.8 billion,” reads the ICPAK titled Assessment of Uptake and Impact of Tax Amnesty in Kenya.
“The amnesty was largely successful attracting cash flows equivalent to 3.9 per cent of the 2019/20 financial year budget,” it adds.
However, Kenya Revenue Authority (KRA) is yet to issue the applicants with final certificates to enable them wire the cash. Terms of the amnesty did not require disclosures if the funds were earned from legitimate sources.
“Funds transferred under the amnesty is exempted from the provisions of Proceeds of Crime and Anti-Money Laundering Act 2009 or any other act relating to reporting and investigation of financial transactions, to the extent of the source of the funds excluding funds derived from the proceeds of terrorism, poaching and drug trafficking,” reads the report.
With no mechanism in place to monitor how the money will be invested once back in the country, the study could not tell whether the objective would spur economic growth.
Samuel Nyandemo, an economics lecturer at the University of Nairobi, described the tax amnesty as a win-win situation saying both the wealth owners and the country stood to benefit.
“Those who would have been penalised by taxes will have evaded the taxman. The move will give the country some financial cushion,” said Nyandemo.
Patrick Mumu, an analyst at Genghis Capital said the inflows will shore up Kenya’s dollar reserves and cushion the shilling against foreign exchange shocks.
“We’ll have an inflow dollars, something we really need at the moment. Unfortunately it’s only a temporary solution to strengthening our current account.
For the current account deficit to narrow considerably, a more permanent solution, such as improving agricultural exports, is needed,” said Mumu.
The amnesty, introduced under the Finance Act 2016, provided an opportunity for Kenyans to declare their assets and incomes abroad and bring them back without paying any taxes.
Individuals who did not remit their monies within the amnesty period were to be slapped with a 10 per cent tax penalty.
The tax holiday is an attempt by government to attract more money into the country at a time when KRA has been constantly missing its revenue targets and the country has a huge external debt to pay.
Expected to collect
KRA collected Sh1.44 trillion for the financial year ended June 30 2019 up from Sh1.43 trillion collected for the 2017/2018 financial year.
But the collection was only 89.44 per cent of the Sh1.61 trillion the agency was expected to collect.