The money sent by Kenyans living and working abroad fell by $71 million (Sh7.4 billion) in just one month following the end of an amnesty for the return of taxable foreign earnings.
Fresh data published by the Central Bank of Kenya (CBK) shows that diaspora inflows in July amounted to $224 million (Sh23.3 billion), down from $295 million (Sh30.6 billion) recorded in June, which was a 24 per cent fall.
June’s diaspora remittances were the highest in years, rising 21 per cent from $243 million (Sh24.7 billion) in May.
CBK said July’s remittances pushed the 12-month cumulative inflows to $2778 million (Sh280 million) from $2501 million (Sh259 million) previously, reflecting 11.1 per cent growth.
“The 12-month cumulative inflows to July 2019 increased to $2,778 million from $2,501 million in the 12 months to July 2018, reflecting a growth of 11.1 per cent,” said CBK in its weekly bulletin.
“North America, Europe and the rest of the world accounted for 48 per cent, 20 per cent and 31 per cent respectively of the remittances in July 2019.”
The Tax Procedures Act was amended in 2016 to provide a tax amnesty on income declared for the year by individuals who earned taxable income outside Kenya.
Suspended Treasury Cabinet Secretary Henry Rotich extended the period for applying the amnesty from December 30, 2017, to June 30, 2018.
Noting that most individuals did not warm up to the amnesty, fearing scrutiny on the source of their funds, Rotich exempted the funds transferred from the provisions of the Proceeds of Crime and Anti-Money Laundering Act even as he extended the period of amnesty by 12 months.
“Mr Speaker, this exemption, however, does extend to proceeds from terrorism, poaching and drug trafficking,” he said.
The inflows have become a key source of foreign exchange earnings, surpassing tea, coffee, horticultural exports and even tourism. The diaspora remittances have also helped shore up the shilling.
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