KRA loses track of KSh896 Billion wired from offshore accounts after tax amnesty

Times Tower. [Photo NMG]

The Kenya Revenue Authority (KRA) cannot track billions of shillings wired from offshore accounts by wealthy individuals following a tax amnesty window granted by the authority.

KRA in 2016 offered a three-year amnesty window on tax and source declaration.

Records indicate that in March, 16,000 Kenyans had repatriated Ksh1.014 trillion from offshore accounts.

In August, KRA records indicate that 3,543 Kenyans repatriated Sh118 billion which has raised questions as to where Ksh896 billion is.

During this period, those repatriating funds back to the country were exempted from declaring their sources of wealth and accounting for previous years where there were tax arrears.

“The amount of money remitted through the amnesty was Sh118 billion and the amnesty had no tax consequences. The seekers were only required to declare to KRA foreign earned income and repatriate proceeds to Kenya by June 30, 2019. In absence, declaration made but funds repatriated later on or before June 30, 2024 would suffer a penalty of 10 percent of the repatriated funds,” KRA told Business Daily.

Most of this money was in offshore accounts in nations which enjoy fewer tax restrictions among them Switzerland, Cyprus, Channel Islands and Liechtenstein.

KRA said that it is not yet clear if the repatriated money was channelled towards development or was re-channelled to offshore accounts after the owners were cleared by the Kenyan government.

The then Treasury Cabinet Secretary Henry Rotich announced the tax amnesty with the view of enticing wealthy Kenyan investors who had stashed colossal amounts of money in offshore accounts.

Usually, wealthy individuals opt to keep their money in offshore accounts to conceal their wealth and avoid scrutiny.

A report by New World Wealth said the high-net-worth individuals in Kenya stash their money in foreign banks and a majority of them enjoy political connections.

With no major impact being felt from this money, it is now thought that the amnesty opened a new window for rogue elites to “clean it” without raising questions on their source of wealth or tax liabilities years before the amnesty.

KRA has since signed an agreement with tax authorities in 130 countries where they will be exchanging suspicious transactions by Kenyans with investments abroad.

 “The EOI (expression of interest) allows KRA to access information pertaining to Kenyans investment abroad, with ease and deal with them in accordance with the law,” KRA stated.