Trade ministry seeks urgent action on VAT refunds

The Ministry of Trade and Investment has called for urgent action to clear Value Added Tax (VAT) refunds owed to companies, saying the delays are undermining industrial growth and discouraging investment.

Trade and Investment Cabinet Secretary Lee Kinyanjui said unpaid VAT refunds running into billions of shillings have eroded investor confidence and stalled expansion plans by firms operating in the country.

He said the ministry is reviewing VAT rates on exports while engaging the Kenya Revenue Authority (KRA) to fast-track the settlement of outstanding refunds.

“We have identified VAT refunds as one of the biggest challenges currently facing companies, and we are keen to resolve this even as we review VAT for exports,” Kinyanjui said.

The CS noted that addressing the issue would help accelerate economic growth, create jobs and boost government revenue.

 The CS was speaking in Naivasha during a two day workshop for top leaders in the Ministry organised by the Kenya Bureau of Standards (KEBs).

Kinyanjui urged senior officers to support the government's development agenda by promoting job creation and support locally manufactured products.

He identified tea and flowers as some of the major products that could propel the economy further as global demand and new markets continue to open up.

The CS noted that for years, the country had relied on Iran, India and Iraq as some of the traditional tea markets but this has gradually changed.

“With the political change in some countries like Iran, we are now seeking new markets like China where demand for tea is on the rise,” he said.

On the floriculture sector, Kinyanjui said rising labour costs in Colombia are driving companies to consider relocating to Kenya, describing the trend as a potential boost for the local economy.

“One of the biggest challenges facing the country is lack of one source of data mainly in the industrial sector and we should urgently address this,” he said.

On the African Growth and Opportunity Act (AGOA), he expressed confidence that ongoing negotiations between Kenya and the US would yield fruits and give the country three-year extension.

Industry Principal Secretary Juma Mukhwana said there was a need to decentralise manufacturing, noting that six counties: Nairobi, Mombasa, Kiambu, Nakuru, Machakos and Kisumu, currently host 90 per cent of manufacturing firms.

“There is a need to devolve manufacturing activities to other counties,” he said.