This archive report was first published on 21 August 2019.
Kenya Revenue Authority (KRA) taxpayers can now breathe a sigh of relief as a new amendment to the Value-Added Act, 2013 takes effect, allowing them to use excess Value Added Tax (VAT) withholding excise to cancel out other tax liabilities.
According to the amendment, registered taxpayers with excess VAT withholding taxes can apply to the commissioner-general to use the funds against any other tax liability, including Pay As You Earn (PAYE), corporate tax, excise, and custom duty.
However, the commissioner must be satisfied that the excess taxes arose out of tax withheld by an appointed tax withholding agent.
Private sector firms have long accused the KRA of slow refunds, with some claiming their businesses have been crippled. This year, private firms received Sh14.2 billion in tax refunds to inject much-needed liquidity into the cash-strapped economy.
Previously, excess VAT could only be deducted in the next financial year as input VAT, while withholding tax could not.
“The Bill seeks to amend the Act to provide for a taxpayer to apply any withheld tax to his credit to offset any other tax liability due from the taxpayer,” said National Assembly Leader of Majority Aden Duale, the sponsor of the Bill.
