Supreme Assurance: Treasury Announces Clearance of VAT

Refund Backlog
Taxpayers can finally heave a sigh of relief after the
Treas ury, on February 27, 2015 released a press
statement announcing its plans to clear the pending VA T
refund claims. In the press release, the National Treasury
indicated t hat together wit h the Kenya Revenue Authority
(KRA ), they had addressed the issue of VA T refund
claims backlog through a verification exercise that will
lead to payment of the pending amounts. However,
refund claims submitted recently will have to wait as the
st
verification was done for claims of upto 31 December,
2013.
This move by the two government bodies will hopefully
renew the optimism taxpayers had in getting their refunds
paid. Taxpayers have overtime been put through a dull
and s eemingly infinite waiting process despite their
numerous appeals to have the refunds repaid. Cabinet
Secretary in charge of Finance, Mr. Rotich and the
President have both given assurances that the refunds
will be paid within the first quarter of this year.
The verification exercise ascertained that the government
owes taxpayers a total of 19. 2 billion which will be
cleared in two installments, one of 11.2 billion and
another of 8 billion. The first installment has already been
verified and processed and the beneficiaries categorized
as below:
I.

II.

Those with no debt: These are claimants who

do not owe any money to the K RA. The
taxpayers within this bracket have an aggregate
of Kshs. 2. 3 billion owed to them. The Treasury
has committed itself to paying this amount owed
immediat ely;
Those with claims exceeding their debt: This
category consists of taxpayers who have debts
owed to the KRA but have VA T claims exceeding
their debt. The value of claims from taxpayers in
this category is Kshs. 4.7 billion. The debt

III.

amount they owe t o K RA is Kshs. 2 billion which

leaves a net payable amount of Kshs. 2.7 billion.
This amount will be paid immediately after
reconciliation of the amounts by KRA is finalized;
and
Those with debts exceeding their claims: This
category consists of taxpayers who owe KRA
debts exceeding the amount of their VA T claims.
The total amount of claims owed to taxpayers in
this category is Kshs. 2.7 billion with
corresponding debt amounting to Kshs. 11
billion. The amounts owed to t hese claimants will
be reconciled and set off against their
outstanding debt.

The press release further announced that the second

installment of 8 billion shillings was being processed and
payments would be made immediately aft er the
verification and debt reconciliation is finalized. All
amounts are expected to be paid by the March 30, 2015.
Companies are keen to see if the gove rnment will finally
honour this commitment to pay unlike others it has given
before. In addition, an ultimate lasting solution to the
delays, which have for long affected cash flow, is
anticipated.
Moving forward, the value of tax claims is expected to
reduce in future due t o the 2013 VA T Act which r educed
the number of VA T exempt items.
Martin Kisuu
Director
Tel: +254 (0) 717077824
Email: martin@taxwiseconsulting.com

Taxwise Consulting Limited is an independen t tax firm that offers tax consulting and advisory services. This publication is p rovid ed for general information and is intended to furnish users with
genera l guidance on the tax matters discussed only. This informa tion is therefore not intended to address the circumstances o f any particular individua l or entity nor is it intended to rep lace or
serve as substitute fo r any advisory, tax o r oth er professional advice, consultation or service. Th e authors and the publish er expressly disclaim all and any liab ili ty, responsibility to any person o r
entity in respec t of any loss, damage or costs of any natu re a rising directly or indirectly fro m relianc e placed on the materia l in this publication . R eaders should consult professional tax advisors to
determin e if an y information contain ed herein remains applicable to th eir facts and circumstances .