KENYA REVENUE AUTHORITY WINS 1.2B TAX SUIT AGAINST INTERNATIONAL COMMUNICATIONS FIRM

KENYA REVENUE AUTHORITY WINS 1.2B TAX SUIT AGAINST INTERNATIONAL COMMUNICATIONS FIRM

By Donald Kogai

The Tax Appeals Tribunal has given Kenya

Revenue Authority (KRA) a nod to demand and

collect Kshs. 1.2 billion in taxes from

an international communications firm.

The tax tribunal at Nairobi dismissed an

application by Oxygen 8 East Africa Limited,

seeking extension to file an appeal out of time

to contest the tax debt. The tax dispute arises

from KRA’s investigation audit against the firm

for July 2015 to February 2019 that raised an

assessment of Kshs. 1,185,596.692 for

withholding tax. The assessment was

confirmed vide an objection decision on 21st

May, 2019.

Aggrieved by the KRA’s decision, Oxygen 8

East Africa Ltd filed a Notice of Appeal at the

Tax Appeals Tribunal but failed to file a

Memorandum of Appeal within time. On 26th

June 2020, the firm sought for extension of

time to file its Memorandum of Appeal and

Statement of Facts on the grounds that its

Managing Director was absent from the

country and instructions were received by its

tax agents after the expiry of time.

KRA opposed the Application on grounds that

it was incompetent for failure to include a

supporting affidavit and that the Notice of

appeal filed by Oxygen 8 East Africa Ltd was

invalid.

The Tribunal had on 11th September, 2020

ruled that its power to extend time is donated

by Section 13 (3) of the Tax Appeals

Tribunal Act and in determining an

application for extension of time it is

guided by the Tax Appeals Tribunal Act and

the Tax Appeals Tribunal (Procedure) Rules

2015 which requires that an Application for an

extension of time to be accepted, a party must

meet the conditions such as absence from

Kenya, sickness and any other reasonable

cause.

Consequently, the Tax Tribunal ruled that

Oxygen 8 East Africa Ltd had failed to provide

an affidavit stating the reasons for its inability

to submit the requisite documents on time.

Further, the Tribunal ruled that the Notice of

Appeal filed was invalid on the ground that the

firm had acknowledged and expressed

commitment to pay Kshs.986, 780, 780,277

but had not entered into an arrangement

with the KRA to pay the sum at the time of

lodging the Notice of Appeal.

The Tribunal in its ruling stated that “…in its

own admission, the Applicant has an

undisputed tax liability which is unpaid and it

has not demonstrated to us that it has offered

any payment plan for the same which is

acceptable to the Respondent.”

KRA shall apply the same decision to similar

applications for extension of time for future

disputes affecting other taxpayers who do not

submit the requisite documents in an

application for extension of time.