The National Treasury has affirmed that the government does not plan to forgo tax refunds totalling KES 610 billion, despite the announcement by Kenya Revenue Authority to halt all payments from February 28, 2023.
According to Cabinet Secretary Prof. Njuguna Ndung’u of the National Treasury and Economic Planning, the suspension of abandonments and any other payments or disbursements related to refunds will continue until a clear streamlining process is established.
The suspension does not however mean that the refunds or abandonments have been scrapped and it is not a change in policy or the intent of the law.
Cabinet Secretary Prof. Njuguna Ndung’u – National Treasury and Economic Planning
In the last five years, KRA disclosed that it has given tax breaks and incentives to different industries, amounting to an average of KES 122 billion per year.
Tax refunds are issued to eligible taxpayers who overpaid their taxes in a specific period and can claim them within five years from the payment date.
KRA has halted the payment of tax reliefs without a set timeline, aiming to conduct an audit and improve the procedures and processes related to tax breaks.
Governments often grant tax reliefs to stimulate economic growth and entice investments in their respective countries.
While these tax reliefs can positively impact the economy, they can also have negative consequences through abuse of the process.
Cabinet Secretary Prof. Njuguna Ndung’u – National Treasury and Economic Planning
Prof. Ndung’u stated that through administrative measures, the implementation of the law will be streamlined to prevent any erosion of the tax base or economic distortions and to achieve the intended objectives of the tax policy.
The Treasury also anticipates that this process will result in the fair, equitable, and effective implementation of the legal tax provisions.
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