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Firms get cash boost as KRA releases Sh14.2bn in refunds

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Firms get cash boost as KRA releases Sh14.2bn in refunds

Kepsa chief executive Carole Kariuki. FILE PHOTO | NMG 

The Kenya Revenue Authority (KRA) has released Sh14.2 billion being tax refunds owed to numerous companies in the country.

This is according to the Kenya Private Sector Alliance (Kepsa), which has been lobbying for the payments, saying that the disbursement will boost cashflow and spur activity in the private sector.

“The KRA has confirmed that tax refund payments amounting to Sh14.2 billion were paid out between July 2018 to June 2019 with Sh11.1 billion paid out in the last quarter of the Financial Year 2018/2019 (April-June 2019),” said Kepsa chief executive Carole Kariuki.

She expressed optimism that the balance from the whopping Sh56.9 billion pending for the past five years would soon be cleared to give Kenyan businesses a much-needed impetus for expansions, factory upgrades and new hirings.

“Refunds owed to manufacturers amounts to Sh20 billion which if paid would spark an annual growth of Sh50 billion in turnover giving treasury Sh6 billion in VAT collections, Sh1 billion in corporate and income taxes as well as create 20,000 indirect jobs,” she said.

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Companies have in the past lamented over cashflow challenges saying delayed tax refunds forced them to scale down production as well as impeded planned expansions necessary to affirm their readiness to face off incoming competition folliwng the activation of the Africawide Free Trade Area.

Delayed disbursement of refunds also forced companies to take costly bank loans to fund operations, leading to high input costs that were eventually transferred to consumers.

Yesterday, the Kepsa boss said the tax refunds coupled with reduction of withholding tax from six to two percent would help reduce input costs making processed goods more competitive in local and global markets. She said regular meetings with senior technocrats had helped thaw the icy relationship between the private and public sectors with an inter-sectoral team formed to validate the VAT refunds claims.

Kenyan firms under the lobby say they will continue to engage with the government to help improve the business environment to attract more local and foreign investors.

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Illicit fuel trade catches on, leaks billions in tax revenue : The Standard

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Fuel tankers parked outside Petroleum Depot at Kivepu in Mombasa County. [Maarufu Mohamed/Standard]

Cases of unscrupulous petroleum dealers diverting fuel products on transit to neighbouring countries are on the rise.

This is denying the government billions of shillings in taxes.
Regular reports on illegal practices by players in the petroleum industry and the penalties meted by the Energy and Petroleum Regulatory Authority (EPRA) show a shift over time, with what is commonly referred to as “dumping” becoming a major headache for authorities.
Previously, adulteration of super petrol and diesel using kerosene was the biggest concern, according to recent reports by the regulator.

SEE ALSO: Firms at Naivasha industrial park to get lower power tariff

But a raft of measures by EPRA since 2018, including the hiking of taxes levied on kerosene and pushing its price to be at par with that of diesel, appears to have eliminated the problem. The focus has now shifted to fuel dumping.
For instance, in its report for the quarter to March 31, this year, EPRA reported a number of cases of fuel dumping and none for adulteration.
Over a similar quarter in 2018, just before it went on an all-out war with players that used kerosene to shore up volumes of petrol and diesel, the regulator had reported all manner of offences relating to adulteration.

For More of This and Other Stories, Grab Your Copy of the Standard Newspaper.  

According to the Petroleum Institute of East Africa, adulteration of petrol and diesel with kerosene loses the country an estimated Sh34 billion in tax revenues annually.
Fuel dumping is equally costly in that when products meant for export end up in local petrol stations, the players do not pay taxes in Kenya, as they are supposed to pay the same in their home countries.

SEE ALSO: Beware of fraudsters, warns EPRA

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The government currently takes 43 per cent of the money that consumers pay for fuel, which translates to about Sh47.17 per litre of petrol, Sh37.23 for diesel and Sh36.49 per litre of kerosene.
Most of the fuel for export is destined for the landlocked DR Congo, Uganda and Rwanda markets.The regulator noted that the cases of fuel dumping were not widespread, but were still an issue of concern.
EPRA Director General Pavel Oimeke said the regulator had over the last two years closed down about 30 petrol stations and revoked several licences as part of the measures to fight fuel dumping.
“It is not widespread, but there are snippets of dumping in the market still occurring. We undertake monitoring with our contracted service providers as well as EPRA staff. With combined with product marking, we are sure that if a product is diverted into the local market, we are going to find them at the stations,” he said.
“We have closed about 30 stations, which were found with export products.”

SEE ALSO: One year jail term or Sh1m fine for electricians without work licence


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Energy and Petroleum Regulatory Authority

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Ban on flights extended as State confirms 16 new cases : The Standard

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The government has extended the ban on international flights by 30 days as it confirmed 16 new cases of coronavirus.
The total tally of persons who have tested positive for the disease now stands at 142.
There have been four deaths while four patients have recovered. 

SEE ALSO: We’re shooting ourselves in the foot on covid-19 pandemic

Suspension on prison visits has also been extended by 30 days starting today.
The extension of ban on international flights follows the expiry of an earlier one of 14 days, which ended yesterday.
Transport Cabinet Secretary James Macharia said the decision was reached after a meeting with the National Emergency Response Committee on Kenya’s situation to which he is a member.

For More of This and Other Stories, Grab Your Copy of the Standard Newspaper.  

The suspensions, as has been the case, exempts charter flights from countries wishing to evacuate their citizens. 
“We do not want flights just landing at Jomo Kenyatta International Airport. Whoever is coming should give us a 72-hour notice at the very least,” said Macharia. 
The requirement for notice before planes are allowed in Kenya was not there initially. 
The suspension also exempts cargo flights, which Macharia said can land provided they have no passengers on board. 
The provision on cargo flights, he said, was key due to shortage and need for medical supplies. 
“We are keen to import and supply medical equipment. In fact, we are already planning for a Kenya Airways flight to China on Wednesday to collect some key medical equipment,” the CS said. 
Macharia, who spoke during the daily briefing on the coronavirus pandemic, lamented that some of the directives issued to operators in the transport sector were being ignored.
This is primarily by matatus, which were instructed to carry less than their vehicles’ passenger capacity to ensure one metre social distance. 
Matatus are under instructions to ensure high standards of hygiene by providing hand sanitisers or handwashing points. 
“From tomorrow (April 6, 2020), any matatu not observing the directives will have their Sacco licenses suspended and the operators charged in a court of law as per the Public Health Act,” said Macharia. 
Motorbikes or boda boda operators must also carry one passenger at a time and wear face masks at all times failure to which they too will be charged in court and their bikes impounded. 
The measures came after prediction that cases in Kenya may hit 1,000 this week, 5,000 mid this month and 10,000 by April 30.
Globally, the number of infections stand at 1.2 million across 183 countries with 65,884 deaths. 
Ministry of Health Chief Administrative Secretary Mercy Mwangangi said so far, 3,836 samples have been tested. 
Between Saturday and Sunday, 530 samples were tested of which 16 turned positive; among them 15 Kenyans and a Nigerian. 
Nairobi registered the most cases, at 12, followed by Mombasa with three and one in Kilifi. The counties have been singled out by the Ministry of Health as high-risk. 
Of the 16, nine are from a batch of 2,050 people who were put under mandatory quarantine by the government. This was upon their arrival from overseas before the suspension of international flights on March 25.
“This is a testimony that mandatory quarantine is aimed at protecting the country,” said Dr Mwangangi.
The rest are from contact tracing of persons who had at one point come into contact with earlier cases. 
Some 11 of the 16 had travel history while five are local transmissions. 
The mandatory quarantine requirement, extended by another 14 days, has already been opposed by some of the those being held. 
However, Mwangangi said mandatory quarantine was necessary. “These are painful decisions that we have to take,” she said.
Ministry of Health’s Acting Director General Patrick Amoth said the ministry will not go back on its word to enforce the mandatory quarantine.
“Up to 55 per cent of the cases that have turned positive are from those held in mandatory quarantine. We will not waiver on the extension just to please some people while others are following the set directives,” said Dr Amoth.

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Cotu okays sacking of 50,000 farm workers : The Standard

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A worker at Maridadi flower farm in Naivasha collects ready roses for dumping in a compost yard due to lack of market. [Antony Gitonga, Standard]

The process of declaring thousands of horticulture workers redundant due to the current crisis caused by Covid-19 has started.

The Agricultural Employers Association (AEA) and Central Organisation of Trade Unions (Cotu) in a joint exercise, will send an estimated 50,000 workers home without salaries, as the number of those affected by the pandemic globally continues to rise.
Flower farm workers will be the most affected after the total collapse of the sector that employs more than 150,000 workers directly.
The collapse of the Dutch auction, which accounted for 70 per cent of flower exports, and the lockdown in Europe has played a major part in the current crisis.

SEE ALSO: Japan cruise ship coronavirus cases climb to 174

According to the AEA boss Wesley Siele, they had a meeting with Cotu in which it was agreed that the workers would be sent home due to the current crisis.
He noted that already, seven farms had indefinitely suspended their operations and sent all their workers home.
“We have signed an agreement with Cotu to send an estimated 50,000 workers home without salaries as we continue to monitor the situation,” he said.

For More of This and Other Stories, Grab Your Copy of the Standard Newspaper.  

Siele noted that since the country recorded the first case leading to flight cancellations, the sector has lost Sh8 billion, with the figures rising by the day.
“Some farmers involved in export of fresh produce are still in operation despite a challenge in high freight charges but those involved in flower growing face a total shutdown,” he said.

SEE ALSO: New China virus cases drop for third day as toll passes 1,600

He called on the government to support farmers involved in production of fresh produce by zero-rating farm inputs like fertilisers and chemicals.
Food security
“We need to address the issue of food security in the coming months by supporting farmers at this planting season as failure to do so will lead to food shortage in the future,” he said.
Siele expressed the association’s concern that two weeks after the president ordered for VAT refunds, the directive had not been effected.
On his part, Kenya Export, Floriculture, Horticulture and Allied Workers Union Secretary General David Omulama called for support to hundreds of the affected workers.

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SEE ALSO: China leader Xi Jinping knew about coronavirus scale much earlier than believed

Mr Omulama noted that in Naivasha, all the over 50 flower farms had sent nearly all their staff home, meaning an economic crisis for the lakeside town and families.


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Covid-19horticultureAgricultural Employers AssociationFlower farm workers

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