It is encouraging to the business community that after the long and bitter struggle to resolve the matter of tax without seeming to have made much of a headway, there is now light at the end of the tunnel in the form of proposed legislation. The National Treasury has formulated regulations that basically empower the Kenya Revenue Authority to net off outstanding tax obligations against verified refund claims by any taxpayer.
It is a shot in the arm for manufacturing enterprises that are owed billions of shillings by the taxman in the form of withholding value added tax refunds.
This measure should contribute towards attaining the targets outlined for the manufacturing sector as one of Jubilee government’s Big Four Agenda.
It is also a welcome move in the State’s attempts to improve the overall business climate. Since the September 2017 change of the formula for calculating and processing the refunds, the amounts owed have accumulated to well over Sh20 billion – effectively denying companies significant liquidity for their operations.
Businesses across Kenya have complained about the hurdles they are experiencing accessing credit from commercial banks and denying them their own cash in the form of refunds was only making their work all the more difficult. It now remains for Parliament to approve the proposed legislation for companies to enjoy the benefits that come with the quick resolution of the refunds problem.
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