The Kenya Association of Manufacturers (KAM) has raised the issue of delays in Value Added Tax(VAT) refunds with a visiting team from the International Monetary Fund (IMF).
KAM raised concerns about delays in remitting VAT refunds, taxation, regulatory burdens on manufacturers, and shortage of US dollars in the market.
“…fluctuation in the availability of the US dollar in the market hinders manufacturers’ ability to meet import payment obligations on time, which delays procurement of raw materials for processing, thus interfering with production schedules,” KAM said in a statement.
- This is because local industry is heavily dependent on raw materials and intermediate goods for processing and capital goods for investment.
- The lobby said fluctuation in the availability of the US dollar in the market hinders manufacturers’ ability to meet import payment obligations on time, which delays procurement of raw materials for processing, thus interfering with production schedules.
Concerns from KAM come at a time when the Kenya Revenue Authority (KRA) is preparing regulations that require all persons carrying on a business to issue an electronic tax invoice.
- Business operators who fail to comply face a penalty that is twice the tax due.
- With the new law, KRA will have visibility of the stock movements of a business venture and to cross-check with the receipts presented.
According to a KRA notice, all businesses, including those not registered for VAT, are required to electronically generate and transmit their tax invoices to KRA via the electronic Tax Invoice Management System-eTIMS
The Authority warns that any business expenditure that is not supported by this electronic invoice shall not be deducted for tax purposes from 1st January 2024.