KRA clarifies on suspension of tax refunds
Times Tower, Kenya Revenue Authority headquarters in Nairobi.
The Kenya Revenue Authority (KRA) has clarified that it has not scrapped any tax reliefs, a day after announcing that it had suspended all tax relief payments.
KRA Board chairman Anthony Ng’ang’a Mwaura had on Tuesday announced the suspension of all tax relief payments effective February 28 until further notice.
“The current suspension and ongoing review of tax reliefs is also aimed at increasing the impact of tax expenditure on economic growth. This will be achieved through minimising tax expenditure and aligning it with international best practices for better internal revenue,” KRA stated, adding that payments will not be made until the end of the audit process.
KRA now says that past and current refund applications will still be processed acknowledging that scrapping of reliefs can only be done through amendment of the law.
“KRA acknowledges all the requests from the statement on suspension of tax reliefs, it is important to note that the statement clarifies on the suspension of provisions of relief particularly with reference to refunds, waivers, exemptions and abandonments. This does not mean that the reliefs have been scrapped,” said KRA in a statement Wednesday.
On Tuesday, Mr Ng’ang’a said the suspension was informed by growing concerns from Kenyans about how tax reliefs and exemptions were governed.
Enjoying waivers
“In the past five years, KRA has granted tax reliefs and incentives totaling Sh610 billion, with an average of Sh122 billion per annum. The move to suspend payment of tax reliefs allows KRA to audit and enhance the tax relief processes and procedures,” he said.
The decision came barely two weeks after the 2022 Tax Expenditure Report by the National Treasury indicated that Kenyan taxpayers forewent Sh316 billion revenues in 2021, with businesses in the financial, transport, manufacturing and communication sectors benefitting most from government’s tax expenditure in recent years.
In the report, Treasury said it was considering reviewing the list of products that were enjoying waivers in order to “rationalise and harmonise” tax expenditures and ensure value for money.
