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Wakianga said timely refunds would ease cash flow problems for struggling businesses amid a persistent credit crunch to the private sector/CFM

Kenya

Manufacturers claim VAT refunds delay is hurting them

Wakianga said timely refunds would ease cash flow problems for struggling businesses amid a persistent credit crunch to the private sector/CFM

NAIROBI, Kenya, Jan 23 – The private sector is calling on Kenya Revenue Authority to hasten the payment of Value Added Tax refunds.   

Kenya Association of Manufacturers Chief Executive Phyllis Wakiaga says the delay is crippling their businesses, adding that timely refunds would ease cash flow problems for struggling businesses amid a persistent credit crunch to the sector.  

“We are urging KRA to speed up and improve liquidity and payment of suppliers,” said Wakiaga. 

According to Wakianga, some businesses have waited for years for the refunds, which has, in turn, affected their liquidity and overall profitability.  

The taxman has over the years struggled to clear refund claims, with the bills standing at Sh26.2 billion as of September 2019. 

Wakiaga also pointed out that access to markets has poised as a challenge in the industry where many traders are often left stranded with their goods. 

“We are keen to get into the African market through the Africa Continental Free Trade Area and the programs that are being out in place should focus supporting SMEs to produce even outside the Kenyan market,” said Wakiaga during the review of the Medium and Small Enterprises policy. 

Other challenges affecting the private sector include the pending bills, which the National Treasury has been pushing for the county and national governments.  

“We still have the issue of liquidity on the pending bills that the government has been discussing since last year,” Wakiaga added. 

The amount of eligible pending bills paid by counties as of December 18, was Sh28.57 billion leaving a balance of Sh22.71 billion.  

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The national government owed a total of Sh58.2 billion of which Sh43.2 billion was contested with only Sh15 billion eligible for payment. Of this, about Sh10 billion was paid by the end of last year leaving an outstanding of Sh4.2 billion.   

The National Government had committed to pay the balance by January 15.  

Marsabit is the latest county to pay Sh600 million in pending bills out of the Sh900 million owed to the private sector. 

However, the budget statement presented for audit to the Office of the Auditor General indicates that out of a total of Sh88.98 billion pending bills only bills amounting to Sh51.2 billion were reported as payable. 

The rest, Sh37.7 billion lacked enough documentation to support services rendered or work done and, therefore, were not recommended for payment.  

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