Kenya Revenue Authority (KRA) has suspended all tax relief payments with effect from 28th February 2023 until further notice, as they aim to enhance the processes related to the payment of tax refunds, exemptions, waivers, and abandonments. In a statement released by KRA, it stated that this move follows concerns from taxpayers, initiating the need to restructure rules and procedures governing tax exemptions.
The statement details that, KRA has granted tax reliefs and incentives totalling Kshs. 610 Billion, with an average of KShs.122 Billion per annum over the past five years. The suspension of tax reliefs apparently, is to allow KRA to audit and enhance the tax relief processes and procedures, and align them with international best practices. KRA has said it will continue to comply with the law by assessing and processing the tax reliefs during this process. However, payments will not be disbursed until the end of the process.
This move is aimed at increasing the impact of tax expenditure on economic growth by minimizing tax expenditure and redirecting resources to finance priority growth-supporting programs. It is part of the Government’s strategy to seal revenue leakage and enable KRA to mobilize more taxes towards the country’s economic growth. The suspension and ongoing review of tax reliefs is also expected to offer a permissible issuance of tax exemptions and ensure equitable processing of tax reliefs.
Anthony Ng’ang’a Mwaura, Board Chairman of KRA says KRA is optimistic that the enhancement of the tax relief process and procedures will increase trust and facilitation, and they remain committed to providing excellent customer service to taxpayers. He promised the Authority will continue working closely with taxpayers to resolve arising issues for ease of tax compliance.
KRA's decision to suspend tax reliefs comes amid concerns that some taxpayers have been exploiting the system, leading to revenue losses. The Authority believes that enhancing the tax relief processes and procedures will offer more transparency and minimize cases of revenue loss.
The suspension of tax reliefs will affect a wide range of tax expenditures, including exemptions, waivers, and abandonments. Tax reliefs have been an important tool for encouraging investment and promoting economic growth in Kenya. However, their effectiveness has been challenged in recent years, with some taxpayers taking advantage of the system.
The move to suspend tax reliefs will provide an opportunity for KRA to audit and enhance the tax relief processes and procedures, ensuring that they are in line with international best practices. This will improve the effectiveness of tax reliefs in promoting economic growth and reducing revenue loss.
KRA says it’s committed to ensuring that the suspension of tax reliefs does not cause undue hardship to taxpayers. The Authority will continue to assess and process tax reliefs during this process. Taxpayers are encouraged to continue submitting their tax relief applications to KRA for processing.
KRA's decision to suspend tax reliefs is aimed at enhancing the tax relief processes and procedures and aligning them with international best practices. The suspension will offer an opportunity for KRA to audit and enhance the tax relief processes and procedures, ensuring that they are effective in promoting economic growth and reducing revenue loss. The Authority reinstated that they remain committed to providing excellent customer service to taxpayers and will continue working closely with taxpayers to resolve arising issues for ease of tax compliance.