Rotich eases rules on return of wealth stashed abroad

Wealthy Kenyans who have hidden assets in foreign countries for years will not be subjected to scrutiny on how they accumulated the cash when they transfer them back home in a proposed amendment to a tax pardon.

Treasury Secretary Henry Rotich said the exemption will, however, exclude fat cats who accumulated riches abroad from crimes of terrorism, poaching and drug trafficking.

Mr Rotich blamed lack of clarity on whether the cash repatriated home will be subjected to provisions of Proceeds of Crime and Anti-Money Laundering Act for the low uptake of the amnesty, first announced in 2016.

Source of wealth

The law requires them to declare the source of their wealth to the Financial Reporting Centre, the anti-money laundering agency.

The amnesty, targeting foreign earned income up to the period ended December 2016, was extended for another six months last December following a delay by the taxman to issue guidelines on repatriation of wealth stashed in offshore accounts.

“Despite the extension, the uptake of amnesty has been low partly due to concerns that when the monies are returned, questions will be raised regarding the source as required by the Financial Reporting Centre,” Mr Rotich said in the Budget Statement presented to the National Assembly Thursday.

“In order to encourage the uptake of the amnesty, I propose to extend the period of amnesty from 30th June, 2018 to 30th June, 2019 and the year of income declaration to be 2017.”

Tax forgiveness

The tax forgiveness will apply to those who declare income from their wealth abroad, including homes, for the period ended December 2017 by filing returns with the Kenya Revenue Authority (KRA) and wiring the cash to bank accounts back home.

The KRA had last November asked Kenyans with riches in countries where the law does not allow for repatriation or those finding difficulties to convert their wealth to cash to report such cases to the commissioner of domestic tax upon declaration.

Those who will fail to comply by the proposed December 2019 fresh deadline will under the law face a 20 per cent penalty on the tax payable for any undeclared funds on top of the tax payable.

The one and a half-year extension will be welcome by tax consultants such as PKF who had earlier this month asked for three to six-month exemption, saying they were overwhelmed by last-minute filings.