The Kenya Revenue Authority (KRA) has suspended all tax relief payments.
According to a statement from the authority’s board chairman Anthony Mwaura, the decision is in concurrence with the National Treasury and Economic Planning.
Mwaura further said the move has been taken in KRA’s bid to enhance the current processes related to the payment of tax refunds, exemptions, waivers and abandonments.
The suspension takes effect from 28th February 2023 until further notice, KRA announced.
Mwaura noted that in the past five years, KRA has granted tax reliefs and incentives totalling Ksh610 Billion, with an average of KSh122 Billion per annum.
“The move to suspend the payment of tax reliefs allows KRA to audit and enhance the tax relief processes and procedures,” said the KRA board chairman.
“KRA continues 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,” he added.
Concerns from taxpayers
The taxman says the suspension of tax reliefs follows concerns from taxpayers, initiating the need to restructure rules and procedures governing tax exemptions.
Further, the current suspension and ongoing review of tax reliefs are also aimed at increasing the impact of tax expenditure on economic growth.
“This will be achieved through minimizing tax expenditure and aligning it with international best practices for better internal revenue,” noted the KRA boss in the statement.
Meanwhile, KRA is optimistic that the enhancement of the tax relief process and procedures will offer a permissible issuance of tax exemptions and also ensure equitable processing of tax reliefs.
The improvement is part of the Government’s strategy to seal revenue leakage and enable KRA to mobilise more taxes towards the country’s economic growth.
It is also part of the aggressive revenue mobilisation plan aimed at enhancing revenue collection and redirecting resources to finance priority growth-supporting programmes.
“This move is aimed at powering the Bottom-up Transformation Agenda (BETA),” said the authority’s board chairperson.
“In addition to enhancing trust and facilitation, KRA remains committed to the provision of excellent customer service to taxpayers. The Authority will continue working closely with taxpayers to resolve arising issues for ease of tax compliance,” he added.
No legal power
The decision to suspend the payment of tax relief has however been opposed by the Law Society of Kenya (LSK).
LSK President Eric Theuri argues that the KRA board chairman has no power to issue such orders.
In a tweet, Theuri said they will be challenging the decision in court.
“Chair KRA has no legal power to suspend the law in so far as it relates to tax refunds, exemptions, waivers & abandonment. Unless immediately revoked, LSK shall challenge this egregious violation of the Law,” the LSK President tweeted on February 28, 2023.
Chair KRA has no legal power to suspend the law in so far as it relates to tax refunds, exemptions, waivers & abandonment. Unless immediately revoked, LSK shall challenge this egregious violation of the Law. pic.twitter.com/KRVZo7ECJv
— Eric theuri (@etadv) February 28, 2023
