Ufaa to spare firms Sh50,000 daily pay in idle assets searchTuesday April 19 2022
Holders of idle assets will be spared from paying up to Sh50,000 in daily fines if Parliament ratifies changes to the law aimed at encouraging the surrender of the unclaimed cash shares and dividends to the State.
The relief is contained in the Finance Bill, 2022 and will apply to all idle assets that should have been declared and surrendered to the State before end of the current financial year.
The law slaps a fine of between Sh7,000 to Sh50,000 for each day a report on idle assets is withheld or the duty is not performed. Holders also pay a fine of 25 percent of the value of the asset when they fail to surrender it to the Unclaimed Financial Assets Authority (Ufaa).
The Treasury says that the punitive fines have discouraged State agencies, insurance companies, banks, pension schemes, law firms and mobile phone money wallets from declaring and surrendering the idle assets.
Idle assets are under the law supposed to be declared and surrendered to Ufaa on or before November 1 every year. Holders file nil returns if applicable.
Unclaimed assets include money in bank accounts that have been dormant for more than five years, bankers' cheques not cashed and contents in safe deposit boxes unclaimed for more than two years.
“The object and purpose of the programme established by subsection 1 shall be to grant relief of the penalties and interest in unclaimed assets where the holder discloses, reports or delivers the assets to the authority,” reads the Finance Bill.
A baseline survey commissioned in 2018 showed that 477,112 public and private entities were holding idle assets in their books but the number is likely to have increased.
The Bill will be debated by MPs before end of this month in what is set to prompt an increase in the surrender of idle assets to the State.
Unclaimed assets are usually invested in Treasury bills giving the government a pool of cheap funds when Kenyans fail to process their claims highlighting the push by the government to woo more holders to declare and surrender the assets.
The relief stands to benefit State agencies that are sitting on idle assets worth billions of shillings and denying the Treasury the much-needed cash to invest in the Treasury bills.
Kenya Power for example disclosed that it was sitting on Sh1.29 billion worth of idle assets last year. The idle assets include deposit refunds, unidentified receipts, unpaid customer electricity deposits, unpaid way-leaves compensation and unclaimed dividends.
The value of unclaimed assets hit a high of Sh54.8 billion as at December last year from Sh50.9 billion six months earlier with the increase blamed on shortage of staff to reunite beneficiaries with their assets.
Ufaa says it has received 23,134 claimants seeking Sh1.5 billion as investors, including tycoons, show disinterest in claiming the idle assets since 2014 highlighting the apathy by beneficiaries despite the tough economic times.
The agency has also attributed the low number of claimants to high levels of paperwork required for low-value claims below Sh1,000.
Ufaa proposed that claims of less than Sh1,000 should only require a national ID for verification for the small amounts that do not make sense for the beneficiaries due to the paperwork involved.