KRA Refunds Kenyans following an order by Pres. Uhuru Kenyatta.

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The release of the money is expected to help Kenyan businesses survive the effects of the Covid-19 pandemic.

In a statement by KRA,the Ksh24 billion Value Added Tax (VAT) refund was part of the Ksh36 billion claims owed to Kenyans. 

The refund claims rose by 67.4% from the 2019/20 financial year which was Ksh14.1 billion. 

The release of the money is expected to help Kenyan businesses survive the effects of the Covid-19 pandemic. 

The current VAT refund scheme in Kenya provides for VAT refunds in three instances – refund of tax on bad debts, tax paid in error and excess credits as a result of zero-rated supplies, the latter being the most common reason for VAT refunds.

Claims are subject to verification before approval and payment, which tends to drag out the process. 

President Uhuru Kenyatta had instructed KRA to pay outstanding VAT refunds and allocated Ksh10 billion in support. 

“I hereby order and direct that the Kenya Revenue Authority shall expedite the payment of all verified VAT refund claims amounting to Ksh10 Billion within 3 weeks; or in the alternative, allow for offsetting of Withholding VAT, in order to improve cash flows for businesses,” he stated on March 25. 

KRA has its work cut out according to the 2020/21 budget which placed the tax revenue target at Ksh1.6 trillion. 

The authority has undertaken various reforms to enhance revenue mobilisation. 

According to the taxman, 4.4 million people filed taxes by June 30, 2020, compared to 3.6 million people who filed in 2019.

KRA attributed the growth in tax filings to investment in the iTax system.