The Star (Nairobi)

25 February 2014

Kenya: KRA Issues Fresh VAT Guidelines

PROSPECTING, exploration and geothermal power generating companies no longer need approval from the Kenya Revenue Authority for their tax-exempt supplies, the state tax agency clarified yesterday.

Under the Value Added Tax 2013 effected on September 2, 2013, such companies do not need VAT remission letters from commissioner of domestic taxes, unlike the now repealed VAT Act of 1989.

The tax man said the companies should seek recommendation from responsible Cabinet Secretaries for energy and mining, commissioner of domestic taxes Alice Owuor said.

If successful, "no exemption approval is required from the commissioner of domestic taxes," she said in a paid up public notice in one of the dailies, citing paragraph 30 of the first schedule of VAT Act 2013.

The exemption applies to imported or locally sourced supplies excluding motor vehicles. It is meant to reduce operation costs incurred in these capital-intensive activities and cut down administrative workload of application for VAT exemptions at the KRA.

Commissioner of customs services Beatrice Memo has, meanwhile, extended the deadline for transit cargo tracks from the port of Mombasa to be fitted by Electronic Cargo Tracking System by another two months.

Memo had on November 26 last year ordered transporters within Single Customs Territory(Kenya, Uganda, Rwanda and South Sudan) established on October 30, 2013, to install ECTS in their trucks by February 1, this year, or have their services halted.

She said the "case by case basis" extension will be subject to transporters submitting an ECTS installation plan by a KRA approved vendor.

The KRA had in November announced complying transporters would enjoy such incentives as a waiver of fees on transit goods licences, priority loading at all customs zones and moving without customs escort through the northern corridor.

Those that were to install the ECTS after December 31 were to renew their transit goods licenses.

"The duration of the extension is based on the number of trucks under installation but in any case not later than April 30, 2014," Memo said in a notice. "Only those trucks with ECTS and TGL extension letters pending installation...will be allowed to convey goods under customs control."

Single motor vehicle units will however be monitored under ECTS from the beginning of March, this Saturday. The ECTS first launched in 2010 but halted pending judicial proceedings is meant to curb loss of revenue through diversion of transit goods.

To further mitigate revenue leaks through counterfeit and contraband goods, the KRA yesterday kicked off an eight-day countrywide sensitisation campaign on new generation excise stamps and production accounting system.

The sensitisation will culminate in Nairobi from March 3 to 5.

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