The Kenya Revenue Authority (KRA) is in the process of simplifying the current Value Added Tax (VAT) refunds processing procedures.
This according to them is to enhance faster payment of refunds to Kenyans.
The simplified (green channel) framework aims at fast-tracking the processing of VAT refund claims from the low-risk sectors.
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This will go a long way in reducing the backlog of VAT refund claims.
County Government institutions dealing with supply of natural water for domestic and industrial use will also benefit.
The taxpayers will substantially benefit from the framework as there shall be minimal verification in processing VAT refund claims.
The taxpayers shall also enjoy expedited payment of their claims.
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The efficacy of the green channel shall also enhance business cash flows predictability and planning.
KRA plans to mitigate any risks arising in these sectors through post audits and sanctions on defaulters where applicable.
In order to remain in the green channel, businesses claiming VAT refunds from the low-risk sectors are required to uphold high compliance levels to tax laws and regulations.
Taxpayers are expected to also uphold all the green channel conditions and commit to continue improving their operations and standards.
Sectors to benefit from the simplified VAT refund processing procedures
To achieve this, KRA has already identified categories of low-risk VAT refund sectors and products, this include:
- Direct tea and coffee exports/auction centres
- Horticulture
- Floriculture
- Fish products
- Millers
- Bakers
- Dairy products
- Pharmaceutical companies
Other categories of sectors and products which will benefit from the green channel framework include
- Sales to Export Processing Zones (EPZs)
- Transits
- Mining companies
- Transport of passengers by air carriers on international flights
- Export of sisal.
The framework is in line with the best international standards supported by the International Monetary Fund’s (IMF) recommended Tax Administration Assessment Tool (TADAT).
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According to TADAT requirements, VAT refunds should be paid out without undue delay.
KRA is optimistic that the revamped process will go a long way in clearing the backlog of VAT refund claims.
In the just-ended 2018/2019 financial year, for example, KRA paid out claims to a tune of Sh14.2 billion to traders and companies registered for VAT.
