Why not pay interest on outstanding VAT refunds?
By Andrew Oduor
To a large extent, a number of companies supply either to withholding VAT agents or some form of zero-rated supplies. This means they will perpetually be in a VAT refund position and thus suffer an additional burden in terms of cost and time in submitting and pursuing VAT refunds from the Kenya Revenue Authority (KRA).
With the extra cost and administrative requirements needed to ensure adherence to the law, businesses are finding it hard to obtain VAT refunds from KRA. This in turn makes it difficult for them to manage their cash flows.
The long drawn process of obtaining refunds from KRA means affected businesses have to finance VAT out of cash generated from operations or arrange additional working capital finance, thereby increasing their business costs.
The system is thus particularly disadvantageous to businesses that supply withholding VAT agents or make zero-rated supplies, as it has a direct impact on their revenue margins. Taxpayers are increasingly feeling like...
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