Firms cite VAT formula for rise in loan defaults

Mr Kaushik Shah, the group governance officer at steel roofing firm Safal. FILE PHOTO | NMG

Manufacturers have blamed change in the formula applied in calculating Value Added Tax (VAT) refunds for cash flow challenges resulting in piling loan defaults.

The taxman in September 2017 enforced the formula meant to ensure traders only claim refunds for zero-rated supplies as part of the VAT regulations published by Treasury Cabinet Secretary Henry Rotich earlier in April that year.

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