Amnesty on Offshore Income is for Tax Purposes Only –KRA

Kenya Revenue Authority (KRA) has said the tax amnesty to Kenyans with offshore investments is for tax purposes only.

Sylvester Okello, KRA Legal Department said concerns had been raised on how the amnesty will be executed, but, “The amnesty will be for Kenyans who will bring the funds back to Kenya.”

Speaking at the Budget 2016 Debrief organized by Grant Thornton Kenya in association with Kenya Private Sector Alliance (KEPSA) and KRA on Friday in Nairobi he said currently no guidelines have been issued.

“No guidelines have been issued on how it will be implemented, but it will involve other players in government,” he said.

The same was noted by Price Water Copper who in their budget analysis said, “It remains unclear how the tax amnesty will be implemented to achieve the Government’s objective of attracting re-investment of income from foreign assets and businesses.”

However, he said due to the non-disclosure element within the Proceeds of Crimes Act, KRA will not involve other agencies who would want to know the source of income.

According to the Treasury Cabinet Secretary, the amnesty for such taxpayers will be implemented provided they submit their returns ad accounts for the year of income 2016 between 1 January 2017 and 31 December 2017.

Read: KRA Suspends Officers Involved in Tax Evasion Scheme at Port of Mombasa

Parag Shah, Partner Advisory  Grant Thornton said the Tax amnesty for assets held abroad was as a result of the Panama papers leak and the commonality across global borders.

“The principle tax, penalties and interest for the year of income 2016 and prior years will be waived. This will encourage investors to declare their income earned,” he said.

This target is expected to contribute to the government’s efforts to increase tax revenue collections by the KRA while at the same time improve revenue administration.

Other initiatives in place include: The introduction of a modern Excise Duty Act and Tax Procedure Act.

The 2016/17 Fiscal Year   budget seeks additional tax measures in the following areas: promoting growth of industries and employment creation, infrastructure development, enhancing equity and fairness in the tax system and tax administration and cushioning household budgets to ease the cost of living.

Okello says all these initiatives are for ‘purposes of expanding the tax base and assist for purposes of upgrading the i-tax system’ with the overall goal of simplifying the process of filing tax returns.

Treasury adjusted its budget deficit projection amounting to Ksh398.1 billion with an aim of bringing it below 4 percent of the GDP from 9.3 percent projected earlier.

Thus, the 2016/17FY will see the government expend and lend a projected KSH 2.264.8 Billion (30.6%) of the GDP, approximately 23 percent more from the 2015/16FY where KSH1, 842.7 Billion was expended.

“These figures for the 2016/17FY however, do include externally funded development projects amounting to 413.6 billion (5.6%) of the GDP. The targeted collections by KRA stands at 1,332 billion as compared to Ksh1,142 billion for the 2015/16FY,” according to Grant Thornton.