The Kenya Revenue Authority (KRA) has begun paying out Ksh10 billion in VAT refunds following a presidential directive and release of funds by the National Treasury.
Commissioner for Domestic Taxes Elizabeth Meyo says the authority expects to finalize the payments process in one week.
The refunds are expected offer financial relief to businesses worst hit by the COVID-19 pandemic especially the horticulture, transport and hospitality sectors of the economy.
“Only those businesses entities that have had their refunds claims verified in line with procedures will receive payments,” said Ms. Meyo in a statement.
This comes after President Uhuru Kenyatta allocated the Ksh10 billion in his eight-point Ksh53.7 billion stimulus package unveiled last week to help give the economy a boost in the middle of an unprecedented crisis.
President Kenyatta also said that part of the Ksh10 billion would be channeled towards payment of pending bills.
The Head of State was concerned that COVID-19 was quickly morphing into an economic problem hence the need for further interventions. The stimulus package unveiled last week was the second wave of economic interventions by the state.
In March, the president also launched the first set of economic stimulus measures that included the reduction of VAT from 16% to 14%, effective April 1, 2020.
The Income Tax Rate (PayAs-You-Earn) was also reduced from 30% to 25% while Corporation Tax was reduced from 30% to 25% among other measures.
Meanwhile, the Central Bank of Kenya (CBK) estimates 75% of Small and Medium Enterprises (SMEs) will run out of cash reserves at the end of June.
Elsewhere, a report by the Kenya National Bureau of Statistics (KNBS) shows that 770,000 Kenyans lost their jobs between January and March this year
The Quarterly Labour Force Report for the first three months of 2020 foreshadows a dark period ahead for Kenyans who were already doing with a grim economy before the outbreak of COVID-19.