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By:
CYNTHIA ILAKO | |||||||||
| Posted:
Jul,02-2019 20:18:09
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Kenyans living abroad sent home $243.19 million in May, a 4.15 per cent drop from $253.73 million the same period last year.
This was also a marginal drop from $245.36 million sent back home in April.
"North America, Europe and the Rest of the World accounted for 49 per cent, 21 per cent and 30 per cent, respectively, of the remittances in May 2019," CBK said in its weekly bulletin. Remittance inflows grew 29.77 per cent to $1.16 billion in the five months to May compared to $890.11 million sent over the same period last year. This shows Kenyans in the diaspora continued to take advantage of the tax amnesty granted on foreign income which came to an end yesterday. The Tax Procedures Act was amended in 2016 with the introduction of Section 37B, which granted amnesty on foreign income that had been earned on or before 31st December 2016 and was subject to taxation in Kenya. This was later amended on April 3, 2017, extending the deadline to allow full amnesty provided the foreign income was declared and funds realized were transferred to Kenya no later than 30th June 2018. The amnesty was further extended to 30th June 2019, despite concerns that it would lead to inflows of illicit cash including proceeds from corruption. According to analysts at PriceWaterhouseCoopers, the government’s decision to extend the deadline date twice is a clear indication that the level of uptake thus far has been below expectation. "It remains to be seen if this new extension will result in a flurry of new applications before the June 2019 deadline," the report by PWC indicated. Since the scheme was introduced in 2016, Kenyans living in the diaspora have sent home $7.52 billion (Sh769.3 billion) to date. Last year, the cumulative foreign cash inflows grew 39 per cent to Sh274.37 billion compared to Sh198.07 billion in 2017. CBK data shows foreign cash inflows hit the highest point in June and May at Sh27.11 billion and Sh25.81 billion respectively when the amnesty scheme was expected to close. "It's not normal to see such growth in remittances...especially not the rate of growth in the last two years. It looks like something is being recorded that was Un-/mid-recorded before," Renaissance Capital global chief economist Charlie Robertson said. PwC analysts however raised questions over the wording of the law on whether or not the remitted funds need to be invested in the country for a specific period of time. "The amnesty neither defines specific minimum investment period nor does it set out punitive measures for failure to maintain funds in Kenya," the report stated. During his budget reading, Treasury CS Henry Rotich failed to mention anything on the tax amnesty and whether it would be extended further. One of the benefits of the amnesty for foreign income is that it enables taxpayers to wipe their slates clean before information can be exchanged between tax authorities and financial institutions globally. Where one is unable to repatriate funds within the amnesty period, applicants have been granted a five year period to remit the funds subject to a penalty of 10 per cent on remittance. | |||||||||
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