VAT law aims to seal revenue leaks in donor projects
Many aid-funded projects are in roads, water and other infrastructure. The law has traditionally allowed material for aid-funded projects in roads, water and other infrastructure to be exempted from paying VAT as an incentive to foreign inflows and development initiatives. But contractors of the projects worth tens of billions of shillings have been using the blanket leeway to acquire extra construction materials, especially cement for other private jobs without paying VAT.
“We have noted that some contractors doing aid-funded public infrastructure projects have been using the letters exempting them from VAT to also buy materials for building houses without paying tax,” said John Njiraini, the KRA Commissioner-General. Mr Njiraini said construction of houses is a different business altogether and is not exempted like the public infrastructure projects.
Mr Njiraini was responding to a query on the sidelines of a seminar called at the Windsor Golf and Country Club by KRA and the Africa Tax Administration Forum (ATAF), which seeks to promote co-operation on tax administration issues in Africa. “People may have failed to notice that one of the major achievements of the new VAT law is that donor-funded projects will no longer enjoy the leeway they have been exploiting.... Read the full, comprehensive news article and discuss at Business Daily AfricaSimilar Stories