East Africa Breweries to receive Ksh1.1bn tax refund

On the reversal of owed income taxes from 2020, East Africa Breweries Plc (EABL) is expected to receive Ksh1.1 billion.
The producer of alcoholic beverages claims that the return is a portion of the Ksh4 billion excess tax that was paid in advance of the period’s actual pre-tax profit, which was lower than anticipated.
The corporation claims that as of now, Ksh2.9 billion in reimbursements have been made available to it following an audit by the Kenya Revenue Authority (KRA).
“When KRA has finished auditing our books, we will receive the refund. However, after the overpaid taxes were confirmed, we already received Ksh2.9 billion in the current audit,” said the EABL Chief Financial Officer Risper Ohaga.
The Tax Procedures Act was amended last year to allow taxpayers to ask for refunds of overpaid tax, including unpaid instalment tax, and EABL’s refund claims have been approved as a result.
Any remaining excess tax is subject to interest and penalties after the refund, which primarily takes the form of offsets against future tax bills.
The commissioner-general of KRA has 90 days to decide on the refund request during which time an audit is conducted to determine whether an overpayment actually occurred or not.
The Tax Appeals Tribunal is open to taxpayers’ appeals over the audit.
For firms with tax overpayments, clearing refunds on overpaid taxes is intended to help with cash flow issues.
“The unpaid tax, including overpaid instalment tax, can be put against future liabilities rather than waiting two years for a return,” according to tax specialists at KPMG.
“Giving the commissioner a 90-day window to consider and decide on the application will give taxpayers the much-needed assurance. Additionally, this will reduce the financial load on taxpayers and lower operating expenses.”
The payment window for tax refunds has been reduced to just six months as a result of recent amendments to the Tax Procedures Act and the 2023 Finance Act.
EABL‘s income tax expense decreased from Ksh8.44 billion to Ksh6.38 billion in the fiscal year that ended in June.
The manufacturer put Ksh12.9 billion on long-term projects throughout the review period, including the increase of its brewing capacity in Moshi, Tanzania, and Uganda.
The capital expenditure was partially financed by debt, which caused borrowings to increase by 41%, from Ksh36 billion to Ksh51 billion.
Business Daily