Kenya Tax Amnesty, an update

Charles Le Feuvre
26 June 2017

The Finance Act 2017 was gazetted on 23 June. This appears to provide some welcome clarity around the manner in which the Amnesty will be applied, and we hope to see any remaining questions addressed in a revised set of Kenya Revenue Guidelines.

By way of background, the Revenue published its ‘Tax Amnesty Guidelines issued under section 37B of the Tax Procedures Act’, on 8 March, those Guidelines containing a surprise in that clause 13 included the provision that: ‘Physical repatriation of the Assets is a requirement under the Amnesty’.

At a subsequent Revenue Authority briefing there appeared acceptance that aspects of the blanket repatriation of assets were impractical, and the Revenue indicated it would consult with stakeholders.

Since then we learned the Amnesty had been extended by six months so as to close on 30 June 2018, and the publication of the Finance Act 2017 last week included the following extract concerning the Amnesty which goes some way to addressing practical issues associated with the repatriation of assets:

27. Section 37B of the Tax Procedures Act, 2015 is amended by-

  • deleting the expression “31st December, 2017” appearing in item (b) and substituting therefor the expression “30th June 2018”;
  • inserting the following new paragraph immediately after paragraph (b) –

“(c) the voluntarily declared funds have been transferred back to Kenya.”

  • deleting the proviso appearing after paragraph (b) and substituting therefor the following new proviso-

Provided that-

  • this section shall not apply in respect of any tax where the person who should have paid tax-
  • has been assessed in respect of the tax or any matter relating to the tax; or
  • is under audit or investigation in respect of the undisclosed income or any matter relating to the undisclosed income;
  • where no funds have been transferred within the period of the amnesty , there shall be a five-year period for remittance but a penalty of 10% shall be levied on the remittance.

This appears welcome as it recognises the difficulty there is in liquidating assets such as private company shares for which there is no market, commercial property, long-term investments and money market instruments carrying early redemption penalties. The five year window should give persons seeking the protection of the Amnesty the flexibility of timing a sale to their advantage, or at least being able to organise a sale in an orderly way.

This appears to be a practical approach by the Revenue, and whilst it is easy to focus on the 10% penalty, this remains a generous arrangement by comparison to other amnesties around the globe in recent years. Five years is also sufficient time for further changes to be introduced, for example, any move on Kenya’s part to tax income wherever it arises in the world might render repatriation redundant?

We will continue to monitor developments closely and where the opportunity allows, engage with the Revenue to ensure revised guidelines contain clarity around the responsibilities under the amnesty of persons with potential interests in the assets of offshore trusts.

With MTC Trust in Nairobi providing full trust and corporate services, Minerva Group is well placed to assist Kenya taxpayers seeking to repatriate ownership of their trusts and holding companies should that be the preferred way in which assets are repatriated. We are also positioned to assist with the Amnesty process itself, from information gathering through to the final submission of the application.


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