Do more on tax refunds

The Kenya Revenue Authority (KRA) has finally added a new feature on its online portal, iTax, which allows users to directly claim refunds of erroneously paid taxes.

To cater to this, the iTax system has been enhanced by creating a new sub-menu under the ‘refunds’ menu for ‘taxes paid in error’ as part of changes introduced by the Finance Act 2022 aimed at facilitating repayments of all categories of levies paid to the taxman by mistake.

This is a welcome step because KRA has over the years needlessly held piles of cash sent to it by mistake by taxpayers. However, more needs to be done to address the perennial problem of delayed tax refunds running into billions of shillings.

Delayed tax refunds have a direct impact on the cash flow of businesses, which can be crippling, especially in these challenging economic times when revenues remain suppressed.

The taxman and the National Treasury must find a lasting solution to the tax refund mess for the sake of thousands of businesses threatened with extinction due to cash-flow problems.

A lengthy verification process amid inadequate cash provided by the Treasury has traditionally delayed payment of value-added tax (VAT) refunds, heaping pressure on the cash-flow positions of manufacturers, especially those in the export business.

This has seen VAT refund claims arising from zero-rated supplies hit an excess of Sh20 billion as of September last year.

KRA last year revealed that it had opted to set up a special unit to handle verification and payment tax refunds amid growing pressure from the private sector. It said a “dedicated unit” will speed up the processing of refunds. The taxman also announced that it had developed a separate system, dubbed Green Channel, for processing claims for firms operating in sectors, and dealing in products, with low risk of fraud.

We hope this has been implemented because businesses need back their money to finance operations.