Businesses call for special VAT refund budget
Lewis Njoka @LewisNjoka
Kenya Association of Manufacturers has proposed the creation of a vote which will enable Kenya Revenue Authority to issue value added tax (VAT) refunds immediately the budget is approved and the Finance Act is in place.
The lobby lamented that while there exists a mechanism for auditing private sector VAT return claims, the process usually stops after the claims have been vetted by the taxman and the Treasury and the returns position determined.
“It’s a question of now advancing the procedure further for KRA to ensure that when we are making the expenditure part of the budget, we have generated the amounts that are outstanding to the private sector so that they are considered within the budget,” said KAM Head of Policy Research, Job Wanjohi.
“We are calling for the creation of a special fund. The role it is going to play is that within the budget making process, when we get to the finance bill, there’s a special allocation that is going to the VAT refunds.
This allocation will be dedicated to the clearance of pending VAT funds,” he said at a Nairobi hotel during a pre-budget hearing for year 2020/2021 organised by the Institute of Economic Affairs.
Treasury owes the private sector between Sh27 billion and Sh30 billion in VAT refunds making it worse for manufacturers already reeling from the current tough economic situation, he said.
“We are calling for special funds to be able to process the VAT refunds outside what KRA ought to refund because we are facing a fiscal trilemma whereby we have low liquidity in the economy and high government expenditure,” said Wanjohi.
