Kenya is looking to stop fraudulent suppliers who lodge false VAT refund claims, which have seen the government struggle to refund an estimated $330 million by the close of the 2012/2013 financial year.
The government commissioned an audit into the ballooning refund claims with preliminary findings showing that most of the claims are inflated.
Cabinet Secretary for National Treasury Henry Rotich said the exercise, which kicked off in September 2014, is nearing completion.
“Last week, we were about 90 per cent to 92 per cent complete. We are just finalising and compiling the figures and then we shall start paying,” said Mr Rotich.
“We are doing the audit to ensure that everything we pay is genuine. However, the figures we are getting are much lower than what had been talked about,” he added.
Mr Rotich would not disclose the total value of the false claims. He said the audit covered VAT refund claims lodged between December 2013 and February 2015. He did not specify the action to be taken against the dishonest suppliers.
Kenya is grappling with the challenge of increasing unpaid VAT refunds, which the business community claim is impacting their cashflow while increasing the cost of doing business. Tax refunds arise when the tax liability of the suppliers is less than the taxes paid to the government.
The Kenya Revenue Authority made a proposal to the National Treasury that the debt be securitised and converted into a debt instrument such as a bond to be traded in the capital markets.
Kenya operationalised its amended VAT Act 2013, which reduced the number of VAT exempt items from a high of 400 to 27 in a bid to simplify tax administration, enhance tax compliance, and eradicate a backlog of refunds.
According to Kenya’s draft Budget Policy Statement (2015), reducing the cost of doing business and encouraging private sector innovation, entrepreneurship and business expansion is a key prerequisite to strong and sustained high growth and poverty reduction.
The government is seeking to develop and implement a business regulatory reform strategy that will help raise the country’s global ranking under the World Bank’s Doing Business Indicators to not more than 60 by the end of 2016.
The government commissioned an audit into the ballooning refund claims with preliminary findings showing that most of the claims are inflated.
Cabinet Secretary for National Treasury Henry Rotich said the exercise, which kicked off in September 2014, is nearing completion.
“Last week, we were about 90 per cent to 92 per cent complete. We are just finalising and compiling the figures and then we shall start paying,” said Mr Rotich.
“We are doing the audit to ensure that everything we pay is genuine. However, the figures we are getting are much lower than what had been talked about,” he added.
Mr Rotich would not disclose the total value of the false claims. He said the audit covered VAT refund claims lodged between December 2013 and February 2015. He did not specify the action to be taken against the dishonest suppliers.
Kenya is grappling with the challenge of increasing unpaid VAT refunds, which the business community claim is impacting their cashflow while increasing the cost of doing business. Tax refunds arise when the tax liability of the suppliers is less than the taxes paid to the government.
The Kenya Revenue Authority made a proposal to the National Treasury that the debt be securitised and converted into a debt instrument such as a bond to be traded in the capital markets.
Kenya operationalised its amended VAT Act 2013, which reduced the number of VAT exempt items from a high of 400 to 27 in a bid to simplify tax administration, enhance tax compliance, and eradicate a backlog of refunds.
According to Kenya’s draft Budget Policy Statement (2015), reducing the cost of doing business and encouraging private sector innovation, entrepreneurship and business expansion is a key prerequisite to strong and sustained high growth and poverty reduction.
The government is seeking to develop and implement a business regulatory reform strategy that will help raise the country’s global ranking under the World Bank’s Doing Business Indicators to not more than 60 by the end of 2016.
The East African
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