Relief as KRA pays traders Sh20.5b tax refunds

Traders pocketed Sh20.4 billion in value-added tax refunds for the financial year ended June 30, 2017, offering them a reprieve after a tumultuous year.

Last year was characterised by a slowdown in business as the country went through a protracted electioneering period.

“During the said year (2016/17), a total of Sh20, 555,841,894 was paid out in VAT refunds,” said the acting Kenya Revenue Authority (KRA) commissioner for domestic revenue, Ruth Wachira.

In the estimates of revenue, grants and loans for the financial year ending June 2019, Treasury said it disbursed about Sh20.5 billion for VAT refunds on domestic goods and services for the financial year 2016/17.

This left it with a net value-added tax of Sh339 billion. This was a significant increase from the previous period when Treasury disbursed about Sh13 billion in VAT refunds.

Incur losses

Treasury projects that about Sh14.4 billion will be paid out in VAT refunds to traders and manufactures in the financial period ending June 2019.

Traders have complained about delays by KRA to disburse tax refunds, a fact that has seen them incur losses as they absorb these taxes.

Australian mining firm Base Resources is one of the companies that benefited from the refund, receiving $1.4 million (Sh140 million) from KRA in the April-June quarter of this year.

Exporters of goods and taxable services do not pay the 16 per cent tax on consumption. Base Resources exports titanium minerals, including rutile, ilmenite and zircon.

The Government owes Base a cumulative $21.3 million (Sh2.1 billion) which relates to both the construction of the Kwale project and the export of the minerals since operations commenced.

Manufactures said VAT refunds result from the six per cent withholding VAT where agents are required to withhold six per cent and remit it to the Government.