Is Kenya's tax system easing burden or raising new hurdles for big business?

Kenya's tax system is undergoing a transformation with the introduction of new digital taxes, tech-driven VAT filing, and an ongoing tax amnesty program. However, amidst these changes, questions arise about whether the system is truly working for the country's large taxpayers, particularly manufacturers. Rispah Simiyu, the Commissioner for Large and Medium Taxpayers at Kenya Revenue Authority (KRA), sheds light on the progress and challenges faced by the tax system in a recent interview on CNBC Africa. Rispah Simiyu, in her role as KRA Commissioner, highlighted the success of the extended tax amnesty program, which has seen over Ksh 140 billion in penalties, interest, and fines waived, with Ksh 4 billion collected in principal tax payments. She mentioned that as of April 7, 2025, KRA had collected Ksh 10.9 billion and waived Ksh 158 billion, showing a positive trend towards achieving the target of Ksh 30 billion set for the program. One of the key innovations introduced by KRA is the VAT pre-populated return filing system. This system aims to enhance compliance by capturing sales transactions and purchase data, cross-matching them to identify inconsistencies or suspicious activities. While the system has shown positive results with performance hitting 109% in December, challenges such as unclaimed input tax and system issues have caused a dip in February filings. Despite these hiccups, the VAT pre-population process is expected to improve VAT revenue performance in the long run. Another major concern for large taxpayers, especially manufacturers, is the issue of outstanding VAT refunds. The Kenya Association of Manufacturers estimates the outstanding refunds at around Ksh 15 billion. According to Rispah Simiyu, KRA has approved VAT claims amounting to Ksh 8.7 billion, with total payments reaching Ksh 28.8 billion. However, there remains a significant amount of unpaid claims and refund adjustment vouchers (RAVs) totaling around Ksh 17 billion. To address this challenge, KRA is in talks with the National Treasury to secure a one-off payment to settle all processed and approved claims, dependent on revenue collection. In conclusion, Kenya's tax reforms are shaping a new landscape for large taxpayers, with a focus on improving compliance, enhancing revenue collection, and addressing outstanding VAT refunds. While challenges persist, initiatives like the extended tax amnesty program and the VAT pre-populated return system demonstrate KRA's commitment to modernizing the country's tax system and fostering a conducive environment for business growth and development.