The Kenya Revenue Authority (KRA) has released Sh14.2 billion being tax refunds owed to numerous companies in the country.
This is according to the Kenya Private Sector Alliance (KEPSA), which has been lobbying for the payments, saying that the disbursement will boost cashflow and spur activity in the private sector.
“The KRA has confirmed that tax refund payments amounting to Sh14.2 billion were paid out between July 2018 to June 2019 with Sh11.1 billion paid out in the last quarter of the Financial Year 2018/2019 (April-June 2019),” said Kepsa chief executive Carole Kariuki.
She expressed optimism that the balance from the whopping Sh56.9 billion pending for the past five years would soon be cleared to give Kenyan businesses a much-needed impetus for expansions, factory upgrades and new hirings.
“Refunds owed to manufacturers amounts to Sh20 billion which if paid would spark an annual growth of Sh50 billion in turnover giving treasury Sh6 billion in VAT collections, Sh1 billion in corporate and income taxes as well as create 20,000 indirect jobs,” she said.
Companies have in the past lamented over cashflow challenges saying delayed tax refunds forced them to scale down production as well as impeded planned expansions necessary to affirm their readiness to face off incoming competition folliwng the activation of the Africawide Free Trade Area.
Delayed disbursement of refunds also forced companies to take costly bank loans to fund operations, leading to high input costs that were eventually transferred to consumers.
Yesterday, the Kepsa boss said the tax refunds coupled with reduction of withholding tax from six to two percent would help reduce input costs making processed goods more competitive in local and global markets. She said regular meetings with senior technocrats had helped thaw the icy relationship between the private and public sectors with an inter-sectoral team formed to validate the VAT refunds claims.
Kenyan firms under the lobby say they will continue to engage with the government to help improve the business environment to attract more local and foreign investors.