KRA pays out a record Ksh.24 billion in VAT refunds

The Kenya Revenue Authority (KRA) paid out a record Ksh.23.6 billion out of Ksh.36.1 billion in total VAT refund claims for the year ending June 30.

The taxman disclosed the payments in a notice published on Tuesday even as it warned taxpayers against lodging fraudulent claims for compensation.

The refunds paid across the 2019/20 Financial Year represents a 67.4 percent rise in paid out VAT refunds from Ksh.14.1 billion in paid claims in the preceding period.

The payment of claims rose following the introduction of a refund on excess credit arising from withheld VAT.

Withholding VAT claims in the year totaled Ksh.8 billion while the two most common types of VAT claims remained claims arising from the manufacture of zero-rated supplies and tax withheld by appointed withholding agents.

The payment of the VAT refunds is expected to boost funding to manufacturers in the country who have in recent years complained over delays to the disbursements by KRA.

Tax payers lodge the claims for refund through the i-Tax platform while the refunds must be lodged within an year from when the tax became due and payable.

The refunds however take time as claims must be verified and approved, an affair which tends to drag the process.

The National Treasury attempts to reduce the bulk of claims through the reduction of zero-rated supplies recently suffered a set-back as Parliament squashed its attempt to re-categorize the supply of common user items through the 2020 Finance Act while it further zero-rated the supply of maize, wheat flour for a period of six-months.

This means that flour processors are now able to put forward claims on input VAT incurred in the processing of flour.

KRA’s attempt to clear the VAT refunds arrears has however received boost after the government set aside Ksh.10 billion in its recently established Ksh.56.6 billion economic stimulus package (ESP).