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KRA wins Sh1.2 billion tax suit against UK firm

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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.

“…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.

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