Export Refund Formula: KAM urged KRA to develop a legal mechanism to allow refund/offset of outstanding and future credit amounts. KRA noted that there is no legal mechanism to allow refunds for past credit amounts and urged KAM to prepare a technical report which they shall jointly present to The National Treasury.
Withholding VAT (WHVAT): KAM proposed the implementation of 2% WHVAT through the assent of the Finance Bill 2019. KRA indicated that a Module to allow claims for refunds/offset via iTax will be ready by the end of October 2019. KRA will issue a public notice so that Members can begin making applications.
VAT credit amounts arising from the refund formula and WHVAT: KAM proposed that KRA expedites the conclusion of the validation exercise, budgetary allocation and clearance of all tax refunds and bills in the next 3 – 6 months. KRA shall undertake a full audit of outstanding figures to obtain precise figures owed to manufacturers. Depending on the figures, the National Treasury will allocate funds for refunds/offset or issue a discountable bond at a commercial bank, which can also be held at a predetermined period of time and rate of interest.
Refund of excise and anti-adulteration levy for users of industrial kerosene: KAM urged KRA to expedite excise tax refund and anti-adulteration levy mechanisms for kerosene for industrial use as per provisions in Miscellaneous, Fees and Levies Act, 2016. KRA committed that the module to allow claim of refunds via iTax has been delivered for testing and will be ready by the end of October 2019.
Plastic recycling: KAM proposed to KRA to expedite development of guidelines for VAT exemption for all services offered to plastic recycling plants and supply of machinery and equipment used and Reduction of corporation tax to 15% for the first 5 years for any investor operating a plastic recycling plant. KRA shall communicate on the way forward.
Excisable Goods Management System (EGMS): KAM urged KRA to implement the EGMS system once all the concerns raised by manufacturers have been resolved. KRA reported that it is impossible to terminate the current contract due to legal implications. KAM will be engaging KRA further on this matter.
Regulatory overreach by KRA: KAM urged KRA to honour the Court Order in relation to seizures of confectionary products by KRA. KRA has stopped seizure of confectionary products with effect from 8th October 2019. KRA reported that they were seizing products because there was no order covering the period between the Finance Bill and Finance Act. For that period, KRA reported that it is owed approximately Ksh. 1 billion by manufacturers. KAM and KRA shall meet to resolve this.
Internal process delays on tax ledgers: KAM urged KRA to streamline and fast-track finalization of tax ledgers. KRA asked Manufacturers facing challenges to engage their respective MTO/LTO Managers at KRA.
Taxation of excisable products: Manufacturers expressed their frustration on the constant increase in excise tax rates which creates an arbitrage opportunity because of price differences, particularly in the EAC market. This creates an unstable business environment. KRA will liaise with the National Treasury to ensure policy stability on excisable goods, work with the Multi-Agency Taskforce to enhance border surveillance and support efforts to harmonize EAC tax rates.
KAM shall engage KRA in November 2019 to assess progress made