Kenya Revenue Authority (KRA) has committed to pay Sh27.6 billion in VAT refunds owed to the private sector by April next year. The move is expected to boost liquidity in the ailing economy.
This follows a meeting between the taxman and members of the Kenya Private Sector Alliance (Kepsa) to iron out concerns raised by businesses.
“KRA has established a project team to facilitate the clearance of 6,000 VAT refund cases worth Sh27.6 billion outstanding as at October 31, 2019 possibly by April next year,” said a joint statement by the two institutions.
KRA says it paid out Sh14.2 billion in VAT refunds in the 2018/19 financial year and another Sh6.2 billion in the first quarter of the current financial year.
This is despite the taxman receiving Sh1.2 billion monthly from the National Treasury against monthly refund applications of Sh2.36 billion.
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KRA says it has created a framework to expedite payment of low-risk refunds as well as enhanced its systems to enable applications for credits arising from withholding VAT in readiness for the review of the law, which is in progress.
Some businesses have waited for years for the refunds, which has affected their cash flows.
Yesterday’s statement also cited KRA’s intent to fight corruption that plagues the institution, with some of its officials aiding tax evaders.
“We welcome 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,” said the statement.
The two entities also noted the numerous private sector players that had been evading paying taxes, agreeing that KRA should increase its surveillance and track the offenders.
Tax evasion is among the factors that contribute to failure by the authority to meet revenue collection targets.
“There are unscrupulous business persons who have invested heavily to ensure they do not pay a coin by evading tax and yet such businesses would like to compete with those who pay their tax,” they said.
“This is an unfair trade practice, which requires decisive action by KRA to guarantee market competitiveness and a level playing field.”