Kenya Revenue Authority (KRA) has now reduced the period of processing Value Add Tax (VAT) refunds from 102 days in the Financial Year 2020/21  to 41 days as of June 2024.

KRA attributed the substantial improvement to the development of internal Service Level Agreements (SLAs) in the refund process chain and preparation of daily reports to root out ageing of cases in a bid to facilitate compliance with the legal requirement of processing claims within the stipulated time frame.

VAT refunds are mostly claimed by businesses dealing in goods and services, which are zero-rated from the 16 percent VAT.

 The development comes against the backdrop of the introduction of the National Tax Policy which provides guidelines for enhancing timely processing of tax refunds.

According to the government’s Strategy on Verification and Clearance of Pending bills, KRA had verified tax refund claims amounting to Sh.16.3 billion comprising Sh.2.8 billion income tax and Sh.13.6 billion in respect of VAT, as at October 31 2023.

As of 31st October 2023, there were approved unpaid VAT claims worth Sh 3.6 billion, out of which Sh8.6 billion were eligible for offset against tax liabilities on 1st January 2024 in compliance with new law.

KRA also effected system integration with its iTax and Integrated Customs Management System(iCMS) systems for real-time confirmation of exports which  are the key driver of refunds.

The introduction of the Electronic Tax Invoicing Management System (eTIMS) further saw a real time system for processing refunds as the system’s instant data relay accelerates refund procedures, thereby improving cash flow for businesses.

Government put in place various measures to enhance refund processing and payments including ensuring optimal allocation for settlement of refunds by The National Treasury and establishing Regional Audit Centres for timely tax refund audits.