The Kenya Revenue Authority (KRA) has significantly improved the efficiency of its Value Added Tax (VAT) refund process, reducing the average processing time from a lengthy 102 days to a mere 41 days as of June 2024.

This substantial improvement is a direct result of the implementation of internal Service Level Agreements (SLAs) and daily reporting mechanisms, aimed at expediting claim processing and ensuring compliance with legal timeframes.

Businesses dealing in goods and services that are zero-rated from the 16 percent VAT are the primary beneficiaries of VAT refunds.

The accelerated refund process is a positive development that aligns with the government's National Tax Policy, which prioritizes timely tax refund processing.

As of October 31, 2023, the KRA had verified tax refund claims totalling Sh16.3 billion, including Sh2.8 billion in income tax and Sh13.6 billion in VAT.

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Of the approved VAT claims worth Sh3.6 billion, Sh8.6 billion were eligible for offset against tax liabilities on January 1, 2024, in accordance with recent legislative changes.

To further streamline the refund process, the KRA has integrated its iTax and Integrated Customs Management System (iCMS) systems, enabling real-time confirmation of exports, a key factor in refund eligibility.

Additionally, the implementation of the Electronic Tax Invoicing Management System (eTIMS) has accelerated refund procedures through its instant data relay, providing businesses with improved cash flow.

The government has also taken proactive steps to enhance refund processing and payments, including ensuring adequate funding allocation for settlements by the National Treasury and establishing Regional Audit Centers to expedite tax refund audits.

These measures collectively contribute to a more efficient and transparent tax refund system, benefiting businesses and fostering economic growth.