Tax Refunds: Are Employees Claiming Their Dues?

What comes to mind when you hear the words tax refund? Typically, what comes to mind is monies owed by the Kenya Revenue Authority (KRA) to businesses. However, even individual taxpayers are entitled to refunds from KRA for excess taxes paid during a financial year.

An image of Kenyan Currency in various denominations

What is a tax refund?

 A tax refund is a reimbursement of excess tax paid or tax paid in error in a given period. It arises when the tax liability is less than the taxes paid. The different types of refunds include: Value Added Tax (VAT), Income tax, Excise duty and Stamp duty.

Income tax refund

Employees contribute to the growth of the country through payment of taxes via the pay-as-you-earn (PAYE) system. Under PAYE, the employer deducts the tax payable by the employee from the gross salary. The tax payable should be net of any reliefs and allowable deductions. The employer then pays the employee their net salary, after deducting the tax remitted to the KRA.

Listen to this podcast episode on Pay As You Earn (PAYE) with KRA's Wanja Wangondu 

Where an employee is entitled to these tax reliefs but the benefit is not granted by the employer, they end up overpaying tax. Tax over-payments may also occur where the monthly tax rates result in higher taxes as compared with the annual tax rates e.g. If an employee works for only part of the year. Any tax over-payments should be calculated and declared by the employee in their annual return. In case of an error during filing of the original return, the taxpayer can file an amended return.

How to apply for a refund on iTax

The filing of the annual return showing a tax over-payment does not result in an automatic tax refund. The employee/taxpayer should take the next step of making a tax refund application via https://itax.kra.go.ke/KRA-Portal/ where all the supporting documents are uploaded:

  • P9 form
  • Insurance premium certificate
  • Mortgage interest certificate
  • Certificate of exemption 

An acknowledgment receipt is then generated. Upon successful application, the outcome of the tax refund application is communicated to the taxpayer within 90 days!

 

 

By KRA Tax Education Department 

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Tax Refunds: Are Employees Claiming Their Dues?