Govt to Pay Kenyans Ksh 16B in Tax Refunds
The authorities have revealed a strategy to disburse Ksh16 billion in tax repayments owed to citizens, accrued from January 1, 2023, to October 31, 2023.
As outlined in the 2024 draft policy statement by Treasury Cabinet Secretary Njuguna Ndung’u, the National Government had accumulated tax refund claims among its outstanding bills from the previous fiscal year.
The income tax refund requests amounted to Ksh2.75 billion, while the Value Added Tax (VAT) refunds were Ksh13.58 billion.
A tax refund is the reimbursement by the government of any excess taxes paid in error within a specific time frame. It is divided into three main categories: Income Tax Refunds, VAT Refunds, and Excise Tax Refunds.
A reimbursement of income tax takes place when an individual or a business pays more income tax than required for a specific year. This situation may arise from various reasons, such as an excessive amount withheld from paychecks or tax deductions that reduce the taxable income.
VAT reimbursements apply to businesses that have incurred higher VAT costs on their purchases and expenditures compared to the VAT they have received from their sales.
A company can obtain refunds by providing the tax authority with appropriate documentation of its taxable transactions.
Excise tax refunds refer to the reimbursement by the government of excise taxes that were previously paid on particular goods or activities. These taxes are levied on items like tobacco, alcohol, fuel, certain luxury goods, and on activities such as gambling or airline travel.
In addition to tax refunds, the government also accumulated Ksh40.8 billion in unpaid pension obligations and incurred a total of Ksh150.95 billion in legal expenses.
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“The legal arrears are handled by a task force in the Office of the Attorney General and Department of Justice. Notably, legal bills are very fluid and some have since been paid while others have arisen from court and arbitral awards,” CS Ndung’u stated.
In summary, the Controller of Services observed that the total unsettled bills of the National Government stood at Ksh567.7 billion. This includes Ksh443.8 billion attributed to State Corporations and Semi-Autonomous Government Agencies, as well as Ksh123.9 billion allocated to Ministries, Departments, and Agencies (MDAs).
To prevent accumulating additional unpaid expenses, CS Ndung’u highlighted the government’s intention to review all existing outstanding payments and analyze the reasons behind their unresolved status.
“This will help the government to address the issue of pending bills conclusively by identifying necessary system changes to prevent the accumulation of arrears,” the CS highlighted.
“Towards this end, the National Treasury with the approval of the Cabinet has established a Pending Bills Verification Committee to carry out a thorough analysis of the stock of National Government pending bills.”
The Committee’s responsibility will include identifying the reasons behind pending bills and providing suggestions on policy, legal structures, and procedures to prevent the increase in the accumulated amount.
Govt to Pay Kenyans Ksh 16B in Tax Refunds
