This archive report was first published on 16 July 2019.
Kenya's cash-strapped economy has received a boost after the Kenya Revenue Authority (KRA) released Sh14.2 billion in tax refunds to private firms. The refunds, which were locked from circulation for a long time, were released in two tranches of Sh11.1 billion and Sh3.1 billion for the financial year 2018/19.
The latest payments follow the intervention of President Uhuru Kenyatta after several petitions by the business community. Businesses, particularly manufacturers, have decried the large accumulation of VAT refunds arising from zero-rated supplies.
According to the Kenya Private Sector Alliance (Kepsa), the refunds owed to manufacturers alone, amounting to Sh20 billion, would spark an annual growth of Sh50 billion in turnover in the industry, creating 20,000 indirect jobs.
Meanwhile, KRA is in the process of simplifying the current VAT refunds processing procedures to enhance faster payment of refunds. The Commissioner of Domestic Tax Department said the simplified framework is aimed at fast-tracking the processing of VAT refund claims from low-risk sectors and reducing the backlog of VAT refund claims.
Other categories of sectors and products that will benefit from the green channel framework include direct tea and coffee exports, horticulture, floriculture, fish products, millers, bakers, dairy products, and pharmaceutical companies.
On July 16, 2019, Treasury Cabinet Secretary Henry Rotich said he had constituted a team to quickly validate the outstanding refunds with a view to clearing them by the end of August.
