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KENYA TAX AMNESTY ON FOREIGN INCOME AND ASSETS (Nairobi)

Kenya Revenue Authority (KRA) has given tax amnesty to Resident and Non-Resident tax payers who earn taxable income from foreign sources. Tax payers should declare their foreign income and assets on or before 30 June Protected content respect of any year ending on or before 31 December Protected content is subject to tax in Kenya, but had not been declared and paid in previous tax returns.

QUALIFYING APPLICANTS

individuals or corporates if 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, settlor or beneficiary/beneficiaries of the trust.

EXCEPTIONS

The amnesty SHALL NOT APPLY TO:

•Income earned in Kenya

•Income earned outside Kenya but already declared and taxed in Kenya

•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 shall not qualify for the amnesty on the date the Finance Act Protected content assented Protected content Protected content

Full amnesty will only be granted if the foreign income and assets are declared and the funds that were realised are transferred back to Kenya no later than 30th June Protected content . Where no funds are transferred by 30th June Protected content , then they must be remitted within 5 years (until 30 June Protected content but subject to a 10% penalty.

WHAT TO DO TO BENEFIT FROM THIS AMNESTY

a)Apply to KRA Commissioner on or before 30th June, Protected content a prescribed form, through the ITax platform
b)Declare your investments abroad
c)Voluntarily declare the amounts of funds you would like to return to Kenya
d)Repatriate the funds back to Kenya by 30th June, Protected content

BENEFITS OF DECLARING THE FOREIGN INCOME AND ASSETS AND BENEfiT FROM THE AMNESTY

a)You will not pay any taxes, penalties or interest on such incomes.
b)KRA Commissioner will not institute any enquiries as to the sources of those incomes.
c)The amnesty therefore grants you an opportunity to clean up your past tax records and begin on a new tax compliant path in the books of the Tax Administration and the Government.
d)A person who applies for the amnesty shall not be required to provide any further details or supporting documentation other than those set out in the prescribed return format.

ONLY CASH TO BE REPATRIATED

Only cash need to be repatriated and thus no mandatory to liquidate and repatriate assets that are other than cash. Unless impossible to repatriate cash Commissioner will review the situation on a case by case basis.

APPLICABLE TAXABLE FOREIGN INCOME FOR THE AMNESTY

The amnesty applies to taxable foreign income which has not been declared or taxed in Kenya.

These include:

COMPANIES:

•Business income generated outside of Kenya by a tax resident, where the business is partly carried on in Kenya and partly carried on outside Kenya.

•Gains or profit from deposits, assets or other property held outside Kenya by a branch in Kenya of a foreign bank from its banking operations in Kenya and

•Business income which arose in Kenya but which was reduced by potentially unjustifiable or unsupportable management fees, technical fees or royalties paid to a related overseas entity i.e. profit t stripping.

INDIVIDUALS:

•Foreign worldwide employment income earned by a tax resident individual;

•For non-resident, any employment income arising from services rendered to a Kenyan permanent establishment of a non-resident employer;

•Foreign pension payments which relate to past employment in Kenya;

•Compensation for work performed in Kenya e.g. salaries or consultancy fees which were paid to an individual’s offshore account.

•Lease payments arising from cross—border leases (where property is situated in Kenya)

Foreign non-trading income such as foreign interest or dividends are not necessarily subject to tax in Kenya and the amnesty regulations do not bring such “foreign income” into the Kenya tax net.

The amnesty can only capture income which initially accrued in Kenya but which was never reported or taxed in Kenya and which was subsequently transferred outside the country. Such income would have been Kenya sourced but it is now located outside Kenya.

Relocating the income beyond Kenya’s borders does not alter its original source hence such amounts should be reported under the amnesty.

For clarification contact me Protected content

Nairobi Forum