BBI leaves the diaspora vulnerable to double taxation, grants investing in counties

By Anthony Thuothuo

The BBI is encouraging counties to court the diaspora in an effort to enhance growth through competitive investments and promotion of entrepreneurship at the county level. “Counties should be guided by a greater focus on being competitive in attracting their residents to be more entrepreneurial, and for investment from other parts of the country, and abroad, to flow into the County” states the BBI report.

The BBI, however, fails to include the diaspora community in the protection against double taxation. Instead, it clearly states that the double taxation protection regulation will only be effective at the national and county levels, leaving Kenyans in the diaspora at the mercy of KRA to do what they find convenient for them about the matter. “No double taxation and double regulation at the National and County level — The inter-governmental mechanisms should be developed and clarified to ensure that this aim is consistently met” The BBI asserts.

In 2017, the Kenya Revenue Authority (KRA) released guidelines for a tax amnesty on income earned outside Kenya by Kenyans. The KRA gave Kenyans one year from January 1st, 2017 to December 31st, 2017 to declare “year(s) of income(s) earned abroad”; threatening that those who voluntarily declared their income abroad “would be happier than those who say let us wait and see” as it was stated by the deputy commissioner in charge of the policy and coordination unit at KRA James Ojee.

While Kenyans in some countries may be protected from double taxation under treaties signed by Kenya with those countries to circumvent double taxation, Kenyans in the USA are at the mercy of KRA and IRS as there is no multilateral tax treaty between the two countries. The UK is one of the countries that have an active double taxation agreement with Kenya that was signed and became effective on January 1, 1976

The Kenya diaspora community has for a long time asked to be recognized and included in the national development process, but the cries have all been in vain. In a 2014 Kenya Diaspora Policy by the Ministry of Foreign Affairs, The Kenya Vision 2030 recognizes Diaspora’s contribution as a major enabler to the growth of the economy and a critical factor in the achievement of Kenya’s overarching vision of a globally competitive and prosperous country by the year 2030. The development of a Diaspora Policy was identified as one of the Kenya Vision 2030 flagship projects.

Under BBI’s “Major Recommendations”, the report proposes to “retain 47 counties and support the voluntary process of Counties forming regional economic blocs” This is a clear indication that all the proposals that the diaspora has been sending to the government for almost a decade of having the diaspora added as the country’s 48th county have gone unconsidered in the current BBI report.

A few Kenya diaspora organizations have recently taken advantage of President Uhuru Kenyatta’s announcement of the extension of the BBI taskforce in readiness for a constitutional referendum, tabling through the media demands that include the creation of a Ministry of diaspora affairs and a diaspora constituency. It is unclear if these demands were received by the taskforce and if they will be added in the final report.

The Kenya Diaspora remittances have continued to steadily grow. In 2018, Kenyans abroad sent home Sh280 billion, surpassing the Sh242 billion sent to the rest of Eastern African nations – Uganda, Tanzania, Rwanda, Burundi, South Sudan, and Ethiopia. This alone should be enough to give the diaspora a bargaining power to have their interests addressed and protected in the constitution to safeguard investment partnerships between the Kenya government, private sectors, non-profits, and Kenyan organizations and individuals in the diaspora.

Thuothuo is a Kenyan living in the USA, a cybersecurity professional from the University of Southern New Hampshire, and a Jamhuri News editor