Kenya Revenue Authority to start payment of Sh19.2b tax refunds

The government has said it will begin immediately the clearance of value added tax (VAT) refund claims backlog, offering relief to firms facing cash flow problems due to the delays.

The National Treasury and the Kenya Revenue Authority said a verification exercise revealed that the refunds backlog had grown to Sh19.2 billion by the end of 2013.

The settlements will be made in two instalments and will be concluded by the end of March.

The Kenya Association of Manufacturers (KAM) has welcomed the move saying it raises optimism in the sector especially for firms that have borne the pain of delays.

READ: Caution over false claims blamed for delay in VAT refunds

KAM CEO Betty Maina, however, noted that liquidity in the sector had greatly been compromised in the five years that the refunds have been pending.

“This is one of the factors that has affected the growth in the industrial sector and has mired us in debt so manufacturers are wondering how to pay up interest on the loans that they took to keep afloat,” said Ms Maina.

In a press release in the local dailies Friday, the government said Sh11.2 billion of the claims has been processed and verified and Sh9.3 billion is payable in the first instalment after debt reconciliation.

The Kenya Private Sector Alliance lauded the move saying it is a fulfilment of the commitment made by President Uhuru Kenyatta during a Kepsa presidential roundtable last year.

The second instalment of Sh8 billion will be paid after verification and debt reconciliation are finalised.