Kshs. 14.2 billion has been refunded to a number of companies in Kenya by the Kenya Revenue Authority (KRA) as being tax refunds, thanks to the Kenya Private Sector Alliance (KEPSA) who have been lobbying for the payments arguing that once done, will result in a cash flow boost thus spurring activity in the private sector. Confirmation from KRA indicate that the said tax refund payments amounting to shs. 14.2 billion have been disbursed over the period between July 2018 and June 2019. Shs. 11.1 billion of this had been paid out in the last quarter of the financial year 2018/2019, that is April to June 2019.

KEPSA chief executive, Carole Kariuki further expressed optimism on the clearance of the past five-year balance of shs. 56.9 billion still pending thus stimulate the much needed expansions and factory upgrades on Kenyan businesses and in turn ignite an annual turnover growth of up to shs. 50 billion. This growth will therefore yield the National Treasury up to shs. 6 and 1 billion in Value Added Tax (VAT) and Corporate plus Income taxes respectively. 20,000 indirect jobs are to be created as well, in the process.

In the past, many companies have blamed their cash flow challenges to delayed tax refunds that have left them no choice other than scaling down production while also inhibiting planned expansion in preparation to face the incoming competition into the country following the free trade area activation in the continent. Delayed tax refunds are also blamed to coerce companies to opt for costly bank loans in order to fund operations thus high input costs that eventually hit the consumers.

The KEPSA top official concluded that the tax refunds together with the recent reduction of withholding tax from 6% to 2% would aid reduce input costs hence making processed goods more competitive in both local and global markets. She acknowledged the significance of regular meetings with senior technocrats including the inter sectoral team formed to validate the VAT refund claims have gone a long way to enhance the relationship between the private and public sectors.

Kenyan firms under the lobby continue to assure their commitment in engaging the government so as to aid and improve the business environment to attract more local and foreign investors. Consult with us to follow up on your business’ tax refund progress.