When filing taxes, it is important to pay the correct amount of money to avoid inconveniences, however, there are instances where an individual or company may make excess payments erroneously.
For such instances, the Kenya Revenue Authority has issued a guideline on how to claim the excess amounts paid, it is therefore important to understand the process of claiming it through a scheme known as tax refund.
For instance, tax refunds resulting from zero rating of exportation of goods allow exporters to be more competitive in the foreign market and allow them to plough the money back into the business.
It also ensures the affordability of certain goods and services deemed as essential for example; zero-rating of bread, milk, and flour and further equity where tax is deducted in error.
Residents of Nakuru lining up to seek services from the Kenya Revenue Authority mobile services on November 24, 2023
Types of tax refunds
Income tax refund
This refund will arise from tax overpayments by both individual and corporate taxpayers for instance deduction of tax (PAYE) by the employer, tax incentives on mortgage interest relief, insurance premium relief, and annual tax relief.
Refunds on income tax also apply when there is an overpayment of instalment taxes or even advance tax credits.
According to KRA, a claim for an Income Tax refund must be made within five years from the date the tax was paid.
This occurs as a result of overpayment of taxes zero-rated supplies or excess credits arising out of withholding VAT.
The overpayment may also be due to bad debt paid after three years but not more than 4 years from the date when a supply of goods is made.
You can reclaim VAT on items you buy for use in your business if you’re VAT-registered.
Excise Tax Refunds
This occurs when a person dealing with excisable goods manufactured in or imported into Kenya has paid excise duty.
The refund will only be made if the product has not been consumed or used in Kenya or if the goods have been damaged or stolen during the voyage or transportation to Kenya.
Excise tax refunds can also be made if the buyer has returned the goods per the contract of sale.
How to Apply
Login to itax.kra.go.ke by entering your KRA PIN and Password
On the iTax menu, select the tax obligation under the refunds menu
Confirm taxpayer details and click next
Fill in the taxpayer’s bank account details and click next
Select your refund type, the claimed reason, the description of the reason for the claim, and the amount upload supporting documents then submit.
All claims must have valid debt status reports before refund processing. First-time claimants will be subjected to a pre-payment audit.
According to KRA, false claims of refund will attract a penalty of an amount equal to two times the amount claimed.
KRA Commissioner for Domestic Taxes Rispah Simiyu speaking during a meeting at Ole Sereni Hotel, Nairobi on October 24, 2023.