Tribunal rules in favour of KRA in tax disputes

The Tax Appeals Tribunal has ruled in favour of KRA in a case filed by M/S Kisii Safari Inns Ltd T/A Kaskazi Beach Hotel (Taxpayer) challenging the collection of taxes amounting to Sh74,265,336.

The Tax Appeals Tribunal in a ruling delivered on September, 11 dismissed the Taxpayer’s application for an extension of time to file an appeal out of time.

The Taxpayer had failed to file an appeal within the statutory stipulated timelines. The Taxpayer filed an application seeking to have time enlarged to appeal to challenge the enforcement measures initiated by the Revenue Authority to collect the outstanding revenue.

KRA opposed the application on the ground that the taxes it sought to collect were based on taxpayers’ self-assessments. KRA further argued that the Taxpayer had admitted owing the taxes demanded but had failed to make payments or present an agreeable payment plan as provided for under section 52 (2) of the Tax Procedures Act 2015.
While agreeing with KRA, the Tax Appeals Tribunal held that it was unable to extend the time for the Taxpayer to file an appeal unless and until the Taxpayer pays the undisputed taxes.

This means that the Authority shall not allow Taxpayers to file appeals on matters with admitted tax liabilities.

On the same note, KRA is set to collect a tax of Sh 1,185,596,692 following a decision by the Tax Appeals Tribunal on September 11 in an application seeking an extension to file an appeal out of time filed by Oxygen 8 East Africa Limited was dismissed.

KRA did an investigation audit against Oxygen 8 East Africa Limited for the period July 2015 – February 2019 and raised an assessment for Sh 1,185,596,692 for withholding tax which was confirmed vide an objection decision on May 21.

Aggrieved by the decision of the KRA, Oxygen 8 East Africa Limited filed a Notice of Appeal at the Tax Appeals Tribunal but failed to file a Memorandum of Appeal within time.

Vide an application dated 26th June 2020, Oxygen 8 East Africa Limited sought for extension of time to file its Memorandum of Appeal and Statement of Facts because 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 Limited was invalid.

The tax appeals tribunal delivered a Ruling on  September 11, 2019, wherein it ruled that its power to extend time is donated by statute i.e. 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, any other reasonable cause.

Consequently, the Tax Appeals Tribunal ruled that Oxygen 8 East Africa Limited had failed to provide an affidavit stating the reasons for its inability to submit the requisite documents on time.

Further, the Tax Appeals Tribunal ruled that the Notice of Appeal filed was invalid on the ground that Oxygen 8 East Africa Limited had acknowledged and expressed commitment to pay Sh986, 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. T

“…in its 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,” Tribunal ruled