East African Tax Consulting

14/01/2026

TAX REFUNDS AS A CASHFLOW MANAGEMENT TOOL.............................................................................................................
A. INTRODUCTION
Many businesses overpay tax or pay tax where non is due and payable. Thereafter they struggle with operational cashflows problems while the Kenya Revenue Authority owes them money in taxes not due.
B. LEGAL BASIS
The tax laws entitles taxpayers to refund of taxes as a matter of right in various circumstances:
(a) Overpaid taxes;
(b) Taxes paid in error;
(c) VAT paid with respect to making zero-rated supplies;
(d) VAT arising from withholding by appointed VAT Agents;
(e) VAT paid on sales which turn into bad debts.
(Refer to Sections 47, 47A, and 47B of the Tax Procedures Act; and sections 17 and 31 of the Value Added Tax Act).
Tax refunds are however time-bound, for example the following timelines apply:
(a) Income tax refunds - within 5 years
(b) VAT refunds on zero-rated and Withholding VAT - within 12 months
(c) VAT on bad debts - between 2 and 10 years
C. THE REFUND PROCEDURE
The typical administrative procedure for refunds is as follows:
1. Taxpayer makes an application to the Commissioner for refund through iTAX;
2. The Refunds Section reviews the legal and operational basis of the application;
3. The Refunds Section conducts an interview with the Taxpayer to ascertain the basis of the application;
4. The Refunds Section validates the credits. The Taxpayer provides required documentation particularly invoices upon which the credits are based on.
5. The Refunds Section cross-checks with the Taxpayer's station, and the Debt Management Department to ensure that the Taxpayer does not have outstanding compliance issues and and tax liabilities. The Commissioner may conduct a tax audit to verify whether taxes are refundable (Refer to section 47(4) of the Tax Procedures Act).
6. Upon approval by the Refunds Section, the claim is forwarded to Finance Department for payment.
7. The Finance Department makes a payment of the approved refund to the Taxpayer's bank account, subject to availability of funds set aside by the National Treasury for refunds.
8. Alternatively, the approved refund is vouched to be offset against future tax liabilities.
By law the Commissioner is required to refund due taxes within 120 days where there is no tax audit and within 180 days where an audit is conducted.
D. CONCLUSION
Managing tax cashflows through refunds is an effective way of ensuring that the business has a cash cushion for operations. Companies should however continuously review their records to ensure that they are not time barred in applying for refunds.
Note:- This is a general guidance on refunds, not a professional legal or tax advice. Contact your Lawyers or Financial Advisors for live cases involving refunds or disputes with the revenue authorities.
East African Tax Consulting/ Starlings & Company Advocates
0722 332729
January 2026

16/09/2025

WHY YOU SHOULD CONSIDER A FAMILY TRUST TO MANAGE YOUR WEALTH
The Trust has gained wide significance as a tool for wealth management in Kenya in the recent past.
The popularity of Trusts has arisen due to several factors. Firstly, growth in wealth and prosperity under private holdings has given rise to a thriving consulting sector in wealth management. The Trust is a convenient tool for wealth management since wealth under Trust benefits from professional management and is not subject to succession proceedings . Secondly, many property owners have witnessed first-hand the consequences of failing to manage wealth properly. The result is often wasting of wealth and resources, poverty and despondency of children and dependents left behind. Property owners therefore desire to safeguard and protect inter-generational wealth. Thirdly legal, institutional and tax reforms in the sector have made Trusts more desirable and easier to administer. Particularly, tax incentives have made Trusts attractive to property owners.
Unfortunately, and despite the obvious benefits of Trusts in wealth creation, transmission and preservation, they have not gained the expected acceptance due to: Low level of awareness about the benefits of Trusts, which are perceived as a novel product only available to a few super-wealthy people; a narrow pool of local professionals who can advise, setup and administer Trusts; and high costs of set-up and administration of Trusts.
Starlings & Company Advocates and East African Tax Consulting have partnered to make Trusts more accessible to the middle class by leveraging on their respective skills to lower the costs of Trusts setup, implementation and compliance. Specific service offerings include Trust formation and incorporation; transferring properties; tax advice and filings; obtaining tax exemptions; and acting as legal and tax Agents.
Kindly contact us in case you need assistance on your Trust setup or management journey.

21/05/2025

We ran to support education of needy students at Alliance High School.

16/05/2025

We are proud sponsors of this event. We support education of the Boy Child 💯

29/12/2024

The tax amnesty is extended by a year, now covers periods up to December 2023.

19/12/2024

KRA guidelines on computation of PAYE following enactment of the Tax Laws Amendment Act 2024.

16/11/2024

On 29th October 2024, the Supreme Court of Kenya delivered its judgment in The Cabinet Secretary for the National Treasury and Planning & 4 Others Versus Okiya Omtatah Okoiti & 52 Others (Petition Nos. E031, E032 & E033 Of 2024).

The Court declared that the Finance Act 2023 was validly enacted by Parliament, to the extent that it made amendments to various tax laws.

This means that the tax provisions of the Finance Act 2023 are valid and enforceable by the Kenya Revenue Authority.

Click this link to read our full analysis of the Case

This Case Update is provided for information purposes only and does not substitute legal or tax advice. Should you require professional advice on matters covered by this Case Update, please get in touch with us.

16/01/2024

East African Tax Consulting is recruiting for a Tax Associate with 1 - 3 years working experience. Applications close on 23 January 2024. Apply through this form

Access Google Forms with a personal Google account or Google Workspace account (for business use).

24/12/2023

Merry Christmas!

04/05/2023

*Finance Bill highlights*

1. Bitcoin and NFTs now defined as digital assets that are subject to tax. Sale of bitcoin and NFTs subject to tax at 3%

2. GOK employees to pay tax on per diem!

3. All "paid partnerships" on IG and brand ambassador roles now to be taxed.

4. Marketing services now subject to 5% withholding tax while the digital content monetisation is subject to 15% withholding tax.

5. If you earn more than 500k per month, then your marginal PAYE tax rate has moved from 30% to 35%.

6. LPG and fertiliser inputs now VAT exempt.

7. Exported services moved from being subject to 16% VAT to being VAT exempt.

8. If a taxpayer disputes a tax assessment by the KRA and appeals to the Tax Appeals Tribunal, they need to deposit 25% of the disputed tax.

9. Wigs, human hair, false beards, eyebrows and eyelashes will now be subject to 5% excise duty.

10. Imported mobile phones to be subjected to 10% excise duty.

11. Print, TV, billboard and radio ads to be charged a 15% excise duty if related to betting or alcohol.

03/04/2023

Kenyans can claim insurance relief for NHIF contributions for the year 2022.