Wealthy Indians living in Kenyan are repatriating their money stored in Kutch banks ahead of the tax amnesty on foreign income of June 2019. According to the Times of India, the non-resident Gujaratis have moved $59.2 million from April to June 2018.
The Kutch banks’ deposits have, therefore, dropped to $1.6 billion in the quarter ended June 2018 from $1.7 billion in the previous quarter. In addition, since December 2017, bank officials believe that $137.7 million has been repatriated from India.
Tax Amnesty in Kenya
The tax amnesty is targeting all penalties, interest, and taxes for taxpayers with foreign income for the period before 31 December 2016. The aim of the amnesty is sharing tax information with other jurisdictions.
The tax amnesty deadline was extended from June 2018 to June 2019 due to concerns that the source of the repatriated funds will be investigated as required by the Financial Reporting Centre. Despite the extensions, foreign income uptake has been low.
To encourage the uptake of the tax, Treasury’s Cabinet Secretary Henry Rotich exempted “repatriated income from the provisions of various Acts relating to reporting and investigation of financial transactions” but it does not apply to terrorism, poaching, and drug trafficking.
To avoid penalties, Kenyan residents with foreign income should make use of the amnesty and declare this income.