What is foreign income tax amnesty?
This is an opportunity for Kenyans to declare their assets and incomes held abroad and to encourage their repatriation to Kenya for development of the country.
Who qualifies for the amnesty?
- Individuals or corporates if they were tax resident when generating the income, living in Kenya or in the diaspora, who have assets and/or earns taxable income from outside Kenya.
- A person who was a Kenyan resident at the time of earning the foreign income and did not declare the income notwithstanding their residency status when applying for the amnesty.
- A person who was a non-resident at the time of earning foreign income which should have been taxed in Kenya.
- For assets held in a trust, the application for amnesty may be submitted by the trustee, settler or beneficiary/beneficiaries of the trust.
Who is exempt?
- Proceeds from crime such as drug trafficking, poaching, terrorism and anti-money laundering activities will not qualify for the amnesty
- A person who has already been assessed in respect of tax on the undisclosed income or is under audit or investigation on matters relating to the undisclosed income.
The Finance Act of 2018 has repealed Section 37B of the Tax Procedures Act thereby extending the period of filing returns under tax amnesty from 30th June 2018 to 30th June 2019. The extension also covers income received in the year 2017.
Reprieve from the commissioner
The new Section 37B also proposes an amendment which provides that the Commissioner shall not question the source of the funds unless the funds are from terrorism, poaching or drug trafficking.
Further, repatriated funds are to be excluded from provisions of the Proceeds of Crime and Anti-Money Laundering Act, 2009 and other Acts relating to investigation of financial transactions.
What happens if the funds are secured against a liability?
Where funds are pledged or secured against a liability, funds net of the liability will have to be repatriated. However, full disclosure of the funds/assets and liabilities will also be required.
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