Africa Oil has moved to the High Court to challenge a Sh2.2 billion tax demand made by the Kenya Revenue Authority (KRA) on unpaid value-added tax (VAT) dating back almost 10 years.
This follows a ruling by the Tax Appeals Tribunal (TAT) in an appeal filed two years ago by the Canadian-based oil firm challenging the move by KRA to recover more than Sh4.5 billion in backdated taxes.
KRA was seeking Sh2.3 billion in income tax on the sale of Africa Oil stakes in three blocks made between 2012 and 2016, and another Sh2.29 billion in VAT transactions made in 2011, 2012 and 2016.
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Africa Oil accuses KRA of making wrongful decisions in computing its tax bill and failing to account for the full value of losses brought forward.
The tribunal threw out KRA’s demands on income tax and ordered that the Sh2.29 billion VAT be reviewed to exclude assessment in respect to 2011 and 2012, a move Africa Oil has vowed to contest in court.
“Africa Oil is pleased that TAT has ruled in favour of the firm with regards to the corporate income tax assessments,” said the company in a statement. “Also, the firm notes TAT’s ruling in favour of KRA with regards to the VAT assessments that amount to $22 million (Sh2.2 billion).
“However, Africa Oil maintains its position that the VAT assessment is without merit and has appealed.”