In the process, KRA fired a number of officers seen to have aided the development and put in place information communication technology system to centralise the operations at KRA.
The taxman then decided to seal all loopholes that allowed importers enjoy tax rebates they did not deserve or that lead to any forms of non-compliance to tax payment requirements.
Among the changes included a system to track goods imported through the introduction of an export entry form.
“KRA introduced a C63 form whose details were meant to be entered into a central system to stem any tax evasion,” said the source.
It later emerged that after a 3-6 months stint, the computer system was done away with and so with many records. Apparently, the system was ‘archiving records faster than verifications could be done and complete.
To clear the backlog of VAT tax refunds, KRA actually tried everything in the books with little success.
It would seem that the more KRA tried to contain the situation, the more it got out of hand.
The trouble, insiders say, was that the measures to normalise the situation had to come in concurrently without interrupting the payment of tax on a day-to-day basis leading to delays in tax refunds.
Under the former Finance Minister Uhuru Kenyatta, the taxman came up with a system that rated the compliance of companies applying for tax refunds with those deemed to be most compliant getting the highest priority for VAT refunds.
In addition, a proposal was also made for Treasury to quarterly allocate monies (Sh1.18 billion a month) towards tax refunds.
All appears not to have worked.
As correctly captured on the former Commissioner-General Michael Waweru’s words: “The reason we have been experiencing the delays is because KRA cannot surpass the budget it has allocated for refunds.”
“We will continue to evaluate our operations with an aim of increasing efficiency in tax refunds by addressing administrative challenges in line with our operations strategy,” said Mr Waweru.
While the attempts to make VAT refunds work is still in the doldrums, the business community and tax expert cries are growing louder.