Experts call for guidelines to navigate tax amnesty
PwC tax director Gareth Harrison (left) with senior tax partner Rajesh Shah during a media briefing at the PwC offices in Nairobi on March 8, 2017. PHOTO | DIANA NGILA
What you need to know:
- Treasury secretary Henry Rotich announced the tax amnesty offer in his budget speech in June last year to attract Kenyan investors who have opted for offshore investments.
- The Finance Act provided for the tax pardon for income earned up to December 31, 2016, but the Kenya Revenue Authority (KRA) is yet to issue guidelines.
- PwC tax director Gareth Harrison said that with guidelines in place, taxpayers will understand the details they are required to provide to the KRA when filing their amnesty forms.
Tax experts have called on the Kenya Revenue Authority (KRA) to put in place guidelines on the tax amnesty extended to Kenyans who have hidden wealth abroad by the end of this month to ease the filing of returns for the affected individuals this year.
Rajesh Shah, a senior tax partner at PricewaterhouseCoopers (PwC), Wednesday said there was need to clarify the ambiguity regarding how the tax amnesty granted by the Treasury last year will be effected, including whether those declaring their offshore wealth will be required to file a separate return for the year.
Treasury secretary Henry Rotich announced the tax amnesty offer in his budget speech in June last year to attract Kenyan investors who have opted for offshore investments.
The Finance Act provided for the tax pardon for income earned up to December 31, 2016, but the Kenya Revenue Authority (KRA) is yet to issue guidelines.
“Currently, the way the law is drafted it might require you to file two returns of income, one at June 30 and the other one on December 31,” said Mr Shah.
“It is important for the government to issue thes eregulations sooner rather than later, possibly before the end of the first quarter of the year, to avoid this ambiguity.”
PwC tax director Gareth Harrison said that with guidelines in place, taxpayers will understand the details they are required to provide to the KRA when filing their amnesty forms.
The tax amnesty is offering reprieve to wealthy Kenyans who have stashed questionable amounts of cash overseas.
It remains unclear whether the amnesty covers income earned in Kenya and not declared, but somehow secretly siphoned out to tax havens.
It is also not known whether it would cover illegally acquired income such as that hidden in Jersey Island by former CMC Holdings’ chiefs.
“A strict interpretation of the wording (of the Finance Act) could mean that locally earned income which has not been declared previously does not qualify for the amnesty even if such income has been used to create income generating assets that are outside Kenya,” Michael Mburugu, a tax partner at PKF, told the Business Daily in an earlier interview.
Also unclear is whether the amnesty includes a waiver of criminal prosecution in respect of other associated tax crimes and offences punishable by law such as bribery and money laundering.
The Treasury is seeking to recover the more than £1 billion (Sh102 billion) looted from Kenyan taxpayers during President Moi’s reign and stashed in offshore bank accounts and prime real estate overseas, according to a forensic study by Kroll Associates.
On Tuesday, Kenya struck a deal with the Jersey government for repatriation of more than Sh380 million confiscated from a company associated with former Kenya Power managing director Samuel Gichuru.
The cash has been at the centre of a long-running money laundering suit in the English Channel island.
