POST ELECTION VIOLENCE AND THE KENYAN PRACTITIONER
The 2007 post election violence that rocked the country during December 2007 and most of January 2008 saw the destruction of many businesses and a mass exodus of people, resulting in a huge number of individuals being displaced.
The signing of the peace accord by the government and opposition has brought calm to the country and a majority of the businesses have resumed operations. In the Kenyan Institute, Small and Medium practices make up a bulk of our practising membership, and they are situated in various regions within the country. There is a fear that, owing to the number of businesses destroyed, there is a significant reduction in the opportunities for work, though there exists the opportunity to offer consultancy for recovery and reconstruction of businesses.
The fact that a number of organisations commenced normal operations towards the end of January or early February, audit and consultancy practitioners are under a lot of pressure to complete client assignments on time without the benefit of having all the necessary resources to allocate to these projects.
As an Institute, we continue to do all we can for our members, key amongst this is to ensure that they are trained continually on emerging disciplines and on new matters affecting the profession and its cross disciplines. We also encourage our members to form alliances and even merge, so as to consolidate their resources and create greater opportunities for taking on sizeable projects.
THE 16TH ECONOMIC SYMPOSIUM
The Institute recently held its annual Economic Symposium, which focused on strategies for reviving the economy. Themed, “Beyond the storm – Strategies for enhanced economic development” it sought to look into all the issues that were impacting, whether adversely or positively, on the sustainable economic progress of the country. The issue of governance came out very strongly, reflecting the debacle of the Electoral Commission of Kenya that plunged us into violence, and the collapse of two stockbrokering firms. The Institute Chairman, Steve Lugalia, remarked that; “There is a need to boost market confidence and integrity and this would be done through the separation of the ownership from the management of the course and more funds being directed to strengthening governance structures”. He also advocated for brokers to make their financial statements public. Though this is not a legal requirement, it would be a show of good faith and boost the confidence that investors must have in the firms managing their funds.
ELECTRONIC JOURNAL NOW AVAILABLE
The Accountant, the Institute journal published bi-monthly is now available in soft copy PDF format. To receive this publication free of charge, kindly send a blank e-mail to firstname.lastname@example.org
UNITED KINGDOM TAX REGIME FOR NON-DOMICILED INDIVIDUALS
It is goodbye to the UK tax haven for non-domiciled individuals after significant changes were confirmed by the Chancellor in his budget speech for the tax year commencing on 6th April 2008. UK resident non-domiciled individuals will not anymore be liable for tax on foreign income and gains remitted to the UK, but on their world-wide income and gains (“the arising basis”) they will be liable unless they elect the remittance basis of taxation.
- Residence test
A day will only be counted if the individual is present in the UK at midnight. Exemptions will also be available to passengers transiting through the UK.
- Personal allowances and the remittance basis rule
Individuals who claim use of the remittance basis will not be entitled to any personal income tax allowances or Capital Gains Tax (GGT) annual exemption allowance for that year, except if foreign income and gains not remitted to the UK in that year are less than £2,000. Money, property and services derived from relevant foreign income will be treated as a remittance from 6th April 2008; however, personal effects and assets costing less than £1,000 are exempt.
- £30,000 charge
A non-domiciled individual that has been resident in the UK “for more than seven of the past ten tax years”, claiming the remittance basis, will have to pay a £30,000 annual tax charge in respect of foreign income and gains left outside the UK during that relevant tax year in addition to the tax due on UK income and gains and remitted foreign income and gains.
- Offshore mortgages
Interest payments made on offshore mortgages existing prior to 12 March 2008 and secured by UK residential properties paid out of relevant foreign income (RFI) only will not be treated as a remittance. However, the principal repayments out of offshore income and gains will be treated as a remittance regardless of new or existing mortgages.
- Cease source
Foreign income from a trade or profession, or rental and savings, will be liable to tax regardless if it was capitalised in previous years and whether the source existed or not on date of remittance.
- Capital Gains Tax losses
Relief will be available for foreign CGT losses if a non-domiciled individual is liable to capital gains tax on foreign gains due to the arising basis from 2008-9. If such individual claims the remittance basis, an irrevocable election will be available to claim such losses in years in which they are liable to tax on the arising basis.