Wealthy Kenyans with overseas billions rush to file returns
Wealthy Kenyans who have hidden assets in foreign countries to avoid paying taxes are in a rush to beat the June 30 deadline for filing returns and repatriating the money to avoid penalties and possible prosecution, tax consultants said Monday.
Treasury secretary Henry Rotich in the Finance Act 2016 provided for the tax pardon as an incentive to woo those with undeclared assets overseas to return them home.
The amnesty, targeting foreign earned income up to the period ended December 2016, was extended for another six months last December following delay by the taxman to issue guidelines on filing and repatriating wealth stashed in offshore accounts.
The Kenya Revenue Authority (KRA) will not follow up on the source of wealth declared and returned by the fat cats within the amnesty time frame under the guidelines issued in March 2017.
Tax consultants at audit firm PKF said there has been a surge in clients seeking to file and return wealth hidden in foreign countries. “Just as it is typical of Kenyans, in the last two-three months we have seen significant uptake of that amnesty and we think it is overwhelming for some of us to be able to accomplish the filing and repatriate those incomes,” PKF tax partner Michael Mburugu said.
“What we have seen is that a lot of money has been repatriated and there are many people waiting to do so. I cannot place a number to it, but generally it is running into billions of shillings.”
It is believed that wealthy Kenyans have stashed away more than Sh100 billion looted from government coffers over the years, in tax-havens such as Jersey.
“We have seen an increase in that (uptake). This increment is largely because of the deadline because Kenyans have a way of running towards the last minute,” tax leader at EY East Africa Francis Kamau said.
KRA said last November that cash filed must be returned by June 30 for the amnesty to apply, with Commissioner for Domestic Taxes Benson Korongo mandated to handle cases where repatriation could not happen for reasons beyond taxpayers’ control.
Ashif Kassam, the Executive Chairman at audit firm RMS, said uptake of the amnesty started last December following further clarifications by the KRA on repatriation.
“It is a positive amnesty because it encourages people to bring in money and invest in the development of Kenya. The uptake has been good, it encourages local investments,” he said.
Mr Kassam and Mr Kamau, however, opposed Mr Mburugu’s proposal for a three-six month extension of the amnesty, arguing there has been enough time.