M-KOPA LOAN SERVICES LLC

On 23 February 2024, the Tax Appeals Tribunal (TAT or Tribunal) in Kenya issued a ruling (M-Kopa LLC v. Kenya Revenue Authority,
Tax Appeal No. 65 of 2023) in favor of a digital financial service provider, affirming that for nonresident companies the place of
effective management (POEM) for tax-residency purposes, is determined based on the location where the board of directors met
and made key management and commercial decisions necessary for the entity to conduct business. This decision also
emphasized that the location of the majority of directors is vital in determining the POEM.

..Read more

Shah & Two Other Siblings

In 2020, siblings sold a parcel of land to an unrelated developer. When computing the CGT payable on the sale of the parcels by the Appellant, the transfer value declared was the sale price as received from the developer, Risun Development Company, of Kshs.305,584,000/=. The Adjusted Cost used was as determined by the valuer of Kshs.389,619,600 on transfer.

The suit property was acquired through a transfer on 30/9/2015 upon conrmation of a grant of probate wherein the Appellants were the beneciaries.

In 2020 after the disposal to a third party the siblings filed and declared a loss on the disposal for CGT purpose. The Commissioner of Domestic Taxes reviewed the transaction documents and amended the siblings’ self-assessment to reflect an acquisition cost of zero on the basis that they did not incur the acquisition cost.

This resulting with a gain on the disposal of the parcels which the Commissioner demanded taxes on

..Read more

Kenya Revenue authority

The taxpayer claimed investment deduction for the building and machinery at the rate of 150% of the cost incurred in the financial year 2018/2019 in accordance with Paragraph 24(1)(f) as read with Paragraph 24(2)(c) of the Second Schedule (now repealed) to the Income Tax Act, Cap 470.

KRA disallowed the investment deduction claim of KShs.423,033,494 and demanded for payment of corporation tax amounting to KShs.29,317,209, indicating that the claim could not be made under the period 2018/2019 but in 2019/2020 on the basis that manufacturing commenced in 2019/2020.

KRA’s contention was that the production levels in June 2019 were very low and constituted test runs and not manufacturing.

KRA also indicated that payments made on behalf of foreign contractors in respect of rent, housekeeping and taxi services constituted consultant fees, which fell within the definition of management fees and were subject to withholding tax at non-resident rates, amounting to KShs.1,662,542.

..Read more

Kenya Revenue Authority

In 2018, the KRA assessed the Church on the tithes and donations it received. The Church objected to the assessment and KRA subsequently confirmed the assessment in its objection decision.

The Church appealed against the objection decision at the Tax Appeals Tribunal (Tribunal). The Church argued that tithes and donations are not subject to income tax. The Tribunal issued a decision in favour of the Church on 19 February 2020.

KRA appealed against the decision of the Tribunal at the High Court. The High Court upheld the Tribunal’s decision in a judgment dated 31 May 2022.

..Read more

Highlands Mineral Water

Highlands Mineral Water Company will now have to pay Kenya Revenue Authority taxes amounting to sh 155.4 million after losing an appeal challenging the same.

The Company had filed its Input tax claim late and hence was disallowed by KRA.

The appellant faulted KRA’s position that input tax is only deductible when VAT returns are filed in accordance with Section 17 (2) of the VAT Act.

The dispute emanated from the KRA’s decision of disallowing the company’s Input VAT claims on self-assessment VAT returns submitted late on account of being time barred contrary to Section 17(2) of the VAT Act due to late filing of the VAT returns inclusive of penalties and interest.

..Read more