This article serves as a comprehensive guide on how to claim a tax refund from KRA in Kenya. In Kenya, taxpayers who have paid excess taxes or taxes in error are eligible to claim a tax refund from the Kenya Revenue Authority (KRA). A tax refund reimburses the surplus tax amount that an individual or a corporation has paid in a specific period.
Understanding the process of applying for a tax refund is essential for taxpayers seeking to recover overpaid taxes or those who qualify for specific tax incentives.
Types of Tax Refunds
Income Tax Refunds
Income tax refunds can arise from various circumstances, including:
- Over deduction of tax (PAYE) by the employer
- Tax incentives on mortgage interest relief, insurance premium relief, and annual tax relief
- Exemptions on account of disability
- Overpayment of installment taxes
- Withholding tax
- Advance tax credits
It is important to note that claims for income tax refunds must be made within five years from the date the tax was paid.
VAT refunds occur when there is an overpayment of taxes due to:
- Excess credits resulting from zero-rated supplies
- Excess credits arising from withholding VAT
- Bad debts, within a period of three to four years from the date of supply, where a registered person has not received any payment from the person liable to pay the tax
Excise Tax Refunds
Excise tax refunds can be obtained when a person dealing with excisable goods manufactured in or imported into Kenya has paid excise duty. Refunds are granted under certain circumstances, such as damaged or stolen goods during transportation, returned goods as per the contract of sale, or excise duty paid on spirits or illuminating kerosene subsequently used to manufacture un-excisable goods.
Eligibility for KRA Tax Refund in Kenya
The Kenya Revenue Authority (KRA) provides tax refunds to certain groups of taxpayers who meet specific criteria. The following are the eligible categories for tax refunds:
- Individuals with Life and Education Insurance Policies: Individuals who have insurance policies covering life and education expenses, and have not received relief for these policies from their employer, may qualify for a tax refund.
- Individuals with Mortgage or Home Ownership Plans: Individuals with mortgage plans or home ownership schemes from designated financial institutions (as listed on the 4th schedule of the Income Tax Act) for owner-occupied properties, and have not received relief from their employer, are eligible for tax refunds.
- Resident Individuals without Personal Relief: Resident individuals who were not granted personal relief during the tax year may be eligible for a tax refund.
- Excess Tax Deducted at Source: Taxpayers who have paid tax deducted at source, which exceeds their final tax liability, are eligible for a refund.
How to Apply for or Claim a Tax Refund
To initiate the process of obtaining a tax refund from KRA, follow these steps:
- Log in to iTax: Access the KRA iTax portal at itax.kra.go.ke using your KRA PIN and password.
- Select Tax Obligation: Under the “Refunds” menu, choose the relevant tax obligation for which you are claiming the refund.
- Confirm Taxpayer Details: Verify your taxpayer details and proceed to the next step.
- Provide Bank Account Details: Fill in the details of your bank account where the refund should be credited.
- Select Refund Type and Claim Reason: Choose the appropriate refund type and specify the reason for the claim. Provide a description of the reason and the refund amount.
- Upload Supporting Documents: Attach any necessary documents to validate your refund claim.
- Submit the Claim: Review the information provided and submit your refund claim.
Tips for Applying for Refunds
- Ensure that refund claims are submitted via iTax within the stipulated period.
- All refund claims must have valid debt status reports before processing.
- First-time claimants may undergo a pre-payment audit for verification purposes.
Processing Time for Tax Refunds by KRA
Taxpayers should be aware that the processing time for tax refunds by the Kenya Revenue Authority takes at least 90 working days. It is important to note that “working days” refer to weekdays, from Monday to Friday. During the refund application process, taxpayers will receive a Refund Acknowledgement Receipt number, which can be used to track the status of their tax refund application. By using this receipt number, taxpayers can stay informed about the progress of their tax refund and ensure a smooth and timely process.
NOTE: Attempting to make a fraudulent or false claim for a tax refund is a serious offense and will lead to penalties. Offenders may be liable to pay an amount equal to twice the value of the claimed refund.
By adhering to the guidelines outlined in this comprehensive guide, taxpayers can confidently navigate the process of obtaining a tax refund from KRA in Kenya. Remember to provide accurate information, attach supporting documents, and follow specific deadlines to ensure a smooth and successful refund application process.
Phone: +254 20 4 999 999 , +254 711 099 999;