About Sh 900 billion that wealthy Kenya Kenya had wired back into the country from foreign accounts after being issued with an amnesty on tax and source declaration cannot be traced.
According to the latest Kenya Revenue Authority (KRA) record, 3543 Kenyans repatriated Sh118 billion as of August 30.
The amount is lower compared to the Sh1.04 trillion that the taxman declared in May 2019 as the amount wired back from offshore by 16,000 Kenyans, leaving an unexplained balance of Sh896 billion.
Previously KRA said it wasn’t sure whether the repatriated mobed was used for the intended purpose of development or taken back to offshore investment after receiving clearance from the government.
The wealthy Kenyans took advantage of the three-amnesty window to repatriate the billions tax-free in a period when they were not allowed to declare the source of their wealth or account for previous years’ tax arrears.
“The amount of money remitted through the amnesty was Sh118 billion and the amnesty had no tax consequences,” the KRA told a local daily publication in a statement.
“The seekers were only required to declare to KRA foreign earned income and repatriate proceeds to Kenya by June 30, 2019.
“In absence, the declaration made but funds repatriated later on or before June 30, 2024, would suffer a penalty of 10 percent of the repatriated funds.”
The amnesty was aimed at attracting wealthy Kenya investors who had opted for offshore investments in an attempt to mask the source of their wealth.
Analysts believe that some individuals could have used the amnesty to clean dirty money and later ship it out to the offshore accounts that might have questioned the initial origins of the wealth.
Before, the income, a significant part thought to have been stolen or acquired irregularly, was stashed in secret foreign accounts.
Wealthy Kenyans have normally stashed their wealth in foreign countries to either escape KRA’s scrutiny or to broaden their investment risks in more politically and economically stable countries.
With the return into the country of the wealth, the owners of the billions of cash have effectively ‘cleaned’ their wealth and evaded any questions on the sources or any tax queries that might have arisen before they made the declaration.
The amount has however not made a major impact in the economy, raising the questions on where the cash has been stored or invested.
The former Treasury Cabinet Secretary Henry in 2019 amended the law to exclude the beneficiaries from the requirement to declare the source of their wealth to a state agency that tracks illicit money – Financial Reporting Centre.
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The taxman now says it will go after individuals who have failed to declare the wealth stashed abroad for tax reasons.
KRA said it was not wrong for Kenyans to invest outside the country but “the only instance where money held outside Kenya by wealthy Kenyans is illegalized is when the same is not declared for tax purposes in Kenya. On this, we are closing in.”
KRA said it had signed agreements with the tax authorities in over a hundred countries for the exchange of income information.
Related: KRA Impose Tax increase in 30 Products, Manufacturers Head to Court
