Expert: Tax amnesty may open gates to illicit flows
MONEY & CAREERS
By Lee Mwiti | February 7th 2017
Treasury Cabinet Secretary Henry Rotich
Confusion is clouding the implementation of a new law granting a tax amnesty to investors with incomes outside the country.
The law, which took effect on January 1 and falls under the Finance Act 2016, prevents the commissioner general of the Kenya Revenue Authority (KRA) from assessing or recovering taxes, penalties or interest in respect of any year of income ending on or before December 31, 2016.
It also refrains him from following up on the sources of income under the amnesty where that income has been declared for 2016 by a person earning taxable income outside Kenya.
However, experts have raised concerns that the law is open to manipulation, and that there are no clear guidelines on its implementation either from the Ministry of Finance or KRA.
Mbiki Kamanjiri, the general manager for tax advisory services at Grant Thornton said since January 1, nothing much has been derived from the law.
“The amnesty legislation as it stands leaves a lot of room for manipulation. There is no clear benefit to the country to be derived from the provisions,” he said.
The general intention of tax amnesties is to net taxpayers who have not been declaring their incomes. By getting them into the system, revenue agencies are able to follow up on them if they fail to remit taxes in the future. However, the provision barring KRA from inquiring about the sources of income renders this goal futile.
Mr Kamanjiri added that in the Budget Speech read in June last year by Treasury Cabinet Secretary Henry Rotich, the amnesty was meant to spur investment in the country since it was implied that to qualify for it, one would have to repatriate the funds to Kenya. However, this has seemingly been left out in the actual wording in the Finance Act.
“We have been waiting for further guidelines on the procedural rules of the amnesty, but there are indications that these may not be forthcoming,” Kamanjiri said.
“Several taxpayers have already taken advantage of this by bringing large sums of money into the country without having to disclose the sources. This finance could be illicit since there is no way to track it.”
Nightmare for road users as Expressway takes shape
- Lawrence Warunge denies killing parents, siblings, farmhand
By Brian Okoth
- Mother, daughter arrested after weapons found in Racecourse, Nairobi
By Betty Njeru
- 2020 KCPE results out today
By Betty Njeru
- Doctor to pay Sh700,000 for death of mother, baby
- No pay hike for civil servants as State rejects Sh68b demand