The amendment to the Value-Added Act, 2013 will see taxpayers no longer wait for tax refunds from the Kenya Revenue Authority (KRA).
The tax-payers will instead use the excess Vale Added Tax (VAT) withholding excise to cancel out other tax liability, including Pay As You Earn (PAYE), corporate tax, excise and custom duty.
Registered taxpayers with excess VAT withholding taxes with the taxman can apply to the commissioner-general requesting to use the funds against any other tax liability.
However, the commissioner has to be satisfied that the excess taxes has arise out of tax withheld by appointed tax withholding agent.
The private sector has in several occasion accused the tax man of slow pace in releasing the refunds, with others claiming their businesses have been crippled. This year, private firms received Sh14.2 billion in tax refunds to inject much-needed liquidity to oil a cash-strapped economy.
Previously, the excess VAT can be deducted in the next financial year as input VAT, withholding tax cannot.
“The Bill seeks to amend the Act to provide for a taxpayer to apply any withheld tax to his credit to offset any other tax liability due from the taxpayer,” said National Assembly Leader of Majority Aden Duale who is the sponsor of the Bill.
A tax-payer is eligible for funds or rebate if the individuals has paid or has been deducted excess relative to the amount he is supposed to pay on: pension, redundancy, pay from current or previous job, self-assessment tax return, foreign income or interests from savings.
If a tax-payer wants to request for a refund during a certain fiscal year, he/she is required to claim the excess tax paid while filing the income tax returns for that specific year.It mostly happens before 31st July of every financial year.
According to KRA’s website, all refunds are processed within a maximum of 90 days after you submit the application for ‘normal’ refunds and about 60 days for traders requesting withholding VAT refunds.
How To Claim Refund from KRA
1. Log in to KRA itax using your usual KRA PIN number and password
2. Point to refunds and choose the applicable type of KRA refund application, foe example, if its income tax refund, select the income tax and fill in all the mandatory sections.
Complete the KRA refund form with basic information, Bank details where you want the money wired, and lastly the reason why you want to be refunded, Refund Type, for example, normal, and a description and the amount.
3. Submit the application by clicking the submit button.