In Summary
  • Experts says the Sh15 trillion will remain abroad unless the government adds tax incentives to the no-questions-asked amnesty.

  • The essence of shell companies is to hide ill-gotten wealth, evade taxation and defeat the laws governing cross-border movement of cash.

  • The havens, defined by flexible tax laws, are found in Panama, Guernsey, the Bahamas or the British Virgin Islands.

  • The wealth stashed away is likely to be “old money” mostly belonging to political figureheads in Kenya’s successive regimes

An amnesty for Kenyans to return money held abroad has had little impact with a new report showing Sh5 trillion is held in offshore accounts.

The money is enough to run the country’s budget for two years and can also retire the mountain of debt (Sh5.1 trillion) that has caused pain through heavy taxation of basic commodities.

TAX HAVENS

Experts says the Sh5 trillion will remain abroad unless the government adds tax incentives to the no-questions-asked amnesty.

The report — “Who Owns the Wealth in Tax Havens? Macro Evidence and Implications for Global Inequality” — by National Bureau of Economic Research, a US-based think tank, found that Kenya, given the size of the economy, was an “outlier” in terms of the number of shell companies registered by citizens.

“Among the countries that created a lot of shell companies (relative to the size of their economy), one finds Jordan, Russia, Taiwan, the U.A.E., Venezuela, Zimbabwe and Kenya — which all have high offshore wealth to GDP ratios,” says the report

MORE INCENTIVES

The essence of shell companies is to hide ill-gotten wealth, evade taxation and defeat the laws governing cross-border movement of cash. The havens, defined by flexible tax laws, are found in Panama, Guernsey, the Bahamas or the British Virgin Islands.

The fresh data shows that wealthy Kenyans holding undisclosed funds in foreign banks have ignored a State tax amnesty to declare the money and repatriate it.

Treasury secretary Henry Rotich in the 2017/18 Budget statement gave Kenyans with wealth abroad one more year to repatriate it, keeping the amnesty window open until June 2019.

On Wednesday, experts called on Treasury to introduce more incentives for the cash to be returned home.

POLITICAL FIGUREHEADS

“The percentage of GDP held off shore is clearly an eye catcher. It speaks to a common sub-Saharan narrative it seems. Kenya is self-evidently an outlier,” said Nairobi based investment analyst Aly Khan Satchu.

He said the wealth stashed away is likely to be “old money” mostly belonging to political figureheads in Kenya’s successive regimes

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