Kenya Revenue Authority has stopped, with immediate effect, all payments of tax refunds currently amounting to Sh610 billion.
The taxman says the claims will have to undergo an audit before any payments are made.
Chairman Anthony Mwaura says the decision to suspend the payments will enhance the current processes related to the payment of tax refunds, exemptions, waivers and abandonments.
“In the past five years, KRA has granted tax reliefs and incentives totaling Sh610 billion, with an average of Sh122 billion per annum. The move to suspend payment of tax reliefs allows KRA to audit and enhance the tax relief processes and procedures,” said Mwaura.
According to KRA, the suspension of tax reliefs follows concerns from taxpayers, initiating the need to restructure rules and procedures governing tax exemptions.
“The current suspension and ongoing review of tax reliefs are also aimed at increasing the impact of tax expenditure on economic growth. This will be achieved through minimising tax expenditure and aligning it with international best practices for better internal revenue,” the taxman added in a statement.
The government has been on a fiscal consolidation path cutting down on its expenditure in a bid to reduce external borrowing.
Mwaura says that the move is part of the government's strategy to seal revenue leakage and enable KRA to mobilise more taxes toward the country's economic growth.
“It is also part of the aggressive revenue mobilisation plan aimed at enhancing revenue collection and redirecting resources to finance priority growth supporting programs,” added the Chairman.
The government last week handed the Kenya National Trading Corporation (KNTC) the mandate to import thousands of tonnes of essential food items duty-free, for the next one year.
Among the commodities that KNTC will be importing includes cooking oil, which has caused anxiety among local edible oil manufacturers.
It will also import large quantities of sugar, rice, beans, and wheat for distribution across the country through its depot network.
