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KRA Suspends Tax Relief Payments

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The Kenya Revenue Authority (KRA) and the National Treasury and Economic Planning have suspended all tax relief payments with effect from 25th February 2023 until further notice.

The taxman says the move is aimed at enhancing the current processes related to the payment of tax refunds, exemptions, waivers and abandonments.

In the past five years, KRA has granted tax reliefs and incentives totalling Ksh610 billion, with an average of Ksh122 billion per annum.

“The move to suspend the payment of tax reliefs allows KRA to audit and enhance the tax relief processes and procedures. KRA continues to comply with the law by assessing and processing the tax reliefs during this process. However, payments will not be disbursed until the end of the process,” said KRA chairman Anthony Mwaura.

The suspension of tax reliefs follows concerns from taxpayers, initiating the need to restructure rules and procedures governing tax exemptions. The current suspension and ongoing review of tax reliefs is also aimed at increasing the impact of tax expenditure on economic growth. This will be achieved through minimising tax expenditure and aligning it with international best practices for better internal revenue.

“KRA is optimistic that the enhancement of the tax relief process and procedures will offer a permissible issuance of tax exemptions; it will also ensure equitable processing of tax reliefs. The improvement is part of the Government’s strategy to seal revenue leakage and enable KRA to mobilise more taxes towards the country’s economic growth,” he added.

The move is also part of the aggressive revenue mobilisation plan aimed at enhancing revenue collection and redirecting resources to finance priority growth-supporting programmes.

“This move is aimed at powering the Bottom up Transformation Agenda (BETA). In addition to enhancing trust and facilitation, ICRA remains committed to provision of excellent customer service to taxpayers. The Authority will continue working closely with taxpayers to resolve arising issues for ease of tax compliance,” Mwaura said.

KRA missed its revenue collection targets by Ksh27 billion in three months to December amid President Ruto’s aggressive push to weed out tax evaders and boost receipts.

Tax collections from five major streams—payroll, corporation, VAT, excise and import duty — in the three months to December amounted to Ksh466.46 billion against a target of Ksh493.11 billion.

Other revenues including investment, fines, levies and forfeitures trailed its target by Ksh6.16 billion with a collection of Ksh33.10 billion in the quarter.

The Treasury plans to increase tax collection by Ksh274.1 billion, or 14.29 percent, to Ksh2.19 trillion in the current fiscal year ending June.

Read: Uhuru Ally Githii Mburu Resigns As KRA Commissioner General

>>> Proposed M-Pesa, KRA Link and Why it Has Kenyans Worried

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BT Reporter
BT Reporterhttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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