KPMG tax manager comments on the effects of the KRA tax pardon

In light of revelations from the Kenyan Revenue Authority (KRA) that more that Sh118 billion is being repatriated to Kenya by wealthy citizens from offshore assets, Senior Tax Services Manager at KPMG Kenya Stephen Waweru has commented on the tax pardon that has brought about this shifting of funds.

The KRA has provided an amnesty period for the repatriation of funds, a period that it further extended by a year from its initial period, drawing it out till June this year. The extension has proved fruitful in pushing more wealthy individuals to bring back value from their assets abroad.

In a report presented to the National Assembly’s Committee on Finance and National Planning, the KRA revealed that more than 3,500 amnesty applications were filed in the extended period. The total value across the applications has been placed at somewhere around Sh118 billion.

The amnesty period also allowed for secrecy as to the source of funds, to encourage greater repatriation. “The amnesty was extended for a further year and assurance given that once the money is transferred, there will be no follow-up on the source of the funds,” said the KRA report.

“The amendment was meant to allow more time for persons seeking amnesty and create favourable environment for repatriation of funds,” it added. Kenya, much like a number of other African countries, has been suffering from revenue collection woes, driven by an increase in defaults and expatriation of wealth.

The move was a way of reinjecting wealth in the Kenyan economy, which is touted to become a driver of growth for the expanding economy of East Africa. However, Stephen Waweru is skeptical as to whether the major share of funds has been returned, given that the intentions of the KRA might have been misinterpreted.

“That was supposed to be a sweetener, but practicability part of it is that it was not possible because if I bring the money, you may not tell the source. They may not have fully succeeded because of a bit of mistrust around whether it was a way for KRA to net them after they declare and go for them in future,” said Waweru.