PROMISE

KRA commits to clear Sh27.6 billion VAT refund backlog by April

The forum also resolved that Customs Management Systems (iCMS) and iTax systems be integrated to enable filing of VAT refund claims

In Summary
  • Private businesses have in past lamented over cash flow challenges brought about by delayed tax refunds, saying it has forced them to scale down production
  • KRA paid out Sh14.2 billion in the last financial year and a further Sh6.2 billion was paid between July and October.
Kepsa chairman Nick Nesbitt and KRA commissioner general Githii Mburu during the fifth joint forum in Nairobi yesterday.
Image: COURTESY

Kenya Revenue Authority (KRA) has committed to clearing pending 6,000 VAT refunds worth Sh27.6 billion by April next year.

Speaking at the fifth joint meeting with the Kenya Private Sector Alliance (KEPSA) yesterday, KRA commissioner general Githii Mburu said his agency has established a project team to facilitate the clearance in order to unlock funds into the real economy.

The forum also resolved that Customs Management Systems (iCMS) and iTax systems be integrated to enable filing of VAT refund claims online where the KRA systems process and send a confirmation report to the manufacturers.

 

Private businesses have in past lamented over cash flow challenges brought about by delayed tax refunds, saying it has forced them to scale down production as well as impeded planned expansions necessary to affirm their readiness to face off incoming competition.

In July, Kepsa said refunds owed to manufacturers if paid would spark an annual growth of Sh50 billion in turnover giving treasury Sh6 billion in VAT collections, Sh1 billion in corporate and income taxes as well as create 20,000 indirect jobs.

Even so, the forum appreciated that KRA notwithstanding the limited National Treasury funding of Sh1.2 billion monthly against refunds applications of Sh2.36 billion -has made good progress on the VAT refunds issue.

KRA paid out Sh14.2 billion in the last financial year and a further Sh6.2 billion was paid between July and October.

Apart from tax refunds, the adoption resolved to adopt a win-win approach to tax enforcement based on taxpayers’ collaboration rather than coercion as such a model will promote tax payment and strengthen KRA’s capacity to meet its targets.

The tax agency is targeting to collect Sh1.8 trillion in this financial year. It has failed to meet targets inn three past financial years.

KRA affirmed its commitment to create a conducive tax regime for business and stakeholder partnerships to foster tax compliance while private sector players reiterate commitment to partner with KRA in dealing with illicit trade, play part in facilitating and improving trade competitiveness.

 

The private sector is desirous to have a tax regime that is coherent with the national productivity agenda as a developing country,'' Kepsa chairman Nick Nesbitt said.

He added that the private sector supports efforts to broaden the tax base and the integration of technological applications to facilitate tax compliance including the use of AI and block chain solutions.

The business community welcomed KRA’s recent efforts and measures to curb corruption as private sector players are entitled to zero-corruption service from the Authority.

Already, KRA has dismissed over 200 tax officers and arraigned more than 50 employees suspected of abetting tax evasion.