KRA speeds up VAT refunds

October 13, 2008

, NAIROBI, October 13 – The Kenya Revenue Authority (KRA) is currently preparing a list of all the outstanding Value Added Tax refunds claims in order to remit them in the next two months.

KRA’s Commissioner General Michael Waweru said Monday that they would submit to Treasury the requirements for funding to enable them comply with President Mwai Kibaki’s directive last week Monday giving the authority 60 days to clear the backlog.

“We will pay everybody immediately the money is availed to us by the government,” he said adding that the settlement of the claims would depend on the amount they receive from the government.

“If the money is availed on a monthly basis, then we will clear them on the same basis,” he added.

He complained that there was a huge backlog because Treasury did not allocate any money for the payment of refunds in the 2007/2008 and 2008/2009 fiscal years.

 “About two or three years ago, the government gave us a lump sum to clear the claims but in the last two years, they have not given us anything despite increasing the monthly payment amount from Sh600 million to Sh1.18 billion,” he said.

The Commissioner General explained that the growth of the economy had seen many people exporting goods thus increasing the activities that generate refund claims.

The issue of unpaid VAT refunds has been one of the challenges that the private sector has constantly cited as an impediment to doing business in the country.

KRA has been accused of ignoring the best practises in the world such as enforcing time limits and paying interest on refunds that are not paid within a specific time frame.

Waweru who spoke in Nairobi after launching this year’s tax payers’ week also disclosed that the authority had achieved its tax collection target for the first quarter of the financial year.

\’\’We are doing quiet well but we will be making that announcement later this week. I have read some figures in the newspapers but they are obviously wrong,” he said in response to speculations that they would have a Sh16 billion shortfall.

He however cautioned that the high inflationary pressures would have a negative impact on their figures.

Asked what impact a revision of the 16 percent VAT charged on electricity would have on their revenues, Waweru said they had not computed the figures but the effect would be ‘significant.’

“Together with Treasury, we will be able to evaluate the effect of the removal of the VAT on us but I think it will be huge,” he emphasised.

Last week, President Kibaki directed the ministries of Energy and Finance to re-evaluate taxes and levies charged on power to ease operating costs of businesses.



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