Tax Case Law

Barclays bank used credit and debit cards from credit card companies namely VISA, Master card and American express. KRA demanded withholding tax on the amounts payable by the bank to credit card companies and on management fees for the service charges to other banks (Interbank charges). The demand was made under section 35 of the...... Continue reading→

Equity bank Limited (EBL) entered into an arrangement of transferring its assets to Equity bank Kenya Limited (EBKL) a wholly owned subsidiary by Equity Bank Holdings Limited (EBHL). The transaction was marred with the following controversies  That the effective date for the transaction was 31 December 2014, a day before 1 January 2015 when capital...... Continue reading→

According to Section 19(5) of the income tax act CAP 470, A resident life Insurance company is taxed on amounts transferred from the Life fund for the benefit of shareholders. Kenindia transferred Sh. 25 million for the benefit of shareholders which was duly taxed. It further transferred over Sh. 111 Million to a statutory reserve....... Continue reading→

Section 24 of the income tax Act, CAP 470, empowers the commissioner to collect tax on dividend where a company is deemed to be avoiding tax by non-distribution of dividend. However, subsection 4, provides that a company may be exempted from this provision if it proves that payment of dividend will prejudice its operations. Oceanfreight...... Continue reading→

Pearl industries a company manufacturing and selling fabrics was subjected to an investigation by KRA with a view of establishing the authenticity of documents used to support input tax claim on suspicion of VAT fraud. Consequently the commissioner disallowed some of the input tax claimed by the company for lack of supporting documents and issued...... Continue reading→

BBK gets services from VISA mastercard who charge them interchange fees claiming they are exempt as fin services KRA claimed this is an imported service as it was a royalty VAT on imported services  the tax Demand was KES 761M. The tax appeals tribunal judged that the assessment was valid thus affirming KRAs demand for...... Continue reading→

KRA issued a private ruling to MKOPA according to section 65(1) of the tax procedures act 2015, exempting imported television sets from VAT. KRA subsequently withdrew the exemption and assessed tax.  It was held that the private ruling creates a legitimate expectation and a legitimate expectation cannot be withdrawn without clear communication and opportunity to...... Continue reading→

The bone of contention in this matter was treatment of education benefit enjoyed by employees of brookhouse group of schools. The law provides for two ways of bringing the benefit to tax, that is taxing it on the employee (through PAYE) according or section 5(4)d  and 5b of the income tax act CAP 470 or...... Continue reading→

Tax procedures act  Sec 51(11) provides that the commissioner should respond to a taxpayers objection within 60 days, failure to which the taxpayers objection stand as allowed. In the above case Sanofi Aventis lodged an objection on 6th December 2016, to a tax decision that had been rendered on 9th November 2016.  The Respondent was...... Continue reading→

Tax procedures act section 44 and 60 grants powers to KRA to search premises and sieze goods, documents and storage devices. These powers were challenged in a high court ruling in May 2018 in a case pitting Dr Robert Ayisi vs KRA. The presiding judge ruled that the above said sections of the tax procedures...... Continue reading→