Lecture 118 Β· The taxman found Booking.com's VAT below its income tax, and tried to charge income it had already declared.
π»ππ πͺπππ πΉπππ: KRA found Booking.com's VAT turnover below its income tax figure and charged income tax of KSh 10.7 million on the gap, money already declared for income tax. The tribunal and the High Court held the same income cannot be taxed twice, and the assessment was set aside.
Illustration: Precursor
Your company declares its income correctly for income tax, and a slightly lower figure for VAT, because of invoice timing and an accounting adjustment that you have already included in the income tax return. The authority sees the gap between the two, and instead of accepting your explanation, charges you income tax again on money you have already declared.
Put yourself in the finance director's chair. When the authority finds your VAT turnover below your income tax, can it tax the gap again as income you already declared?
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Precursor is published by the FinTech Association of Kenya and exercises independent editorial judgement under the Editorial Independence Charter. This article is labelled Precursor Executive Classroom, which marks commercial material. Knowledge on Tax and financial judgement.
Lecture 126 Β· A director kept meeting the taxman instead of appealing, and four years on the bill had only grown.
π»ππ πͺπππ πΉπππ: KRA confirmed a KSh 899,328 income-tax bill against Saphira, and its director spent four years in meetings and relied on his compliance certificates instead of appealing. The tribunal held meetings do not stop the thirty-day clock, a certificate is not proof of payment, and refused leave to appeal out of time; the debt had grown to KSh 1.4 million.
Tax and financial judgement Β· 4 min read Β· Paid
Lecture 125 Β· A rice importer called cleaning and repacking manufacturing, and the court said packaging is not making.
π»ππ πͺπππ πΉπππ: Mjengo claimed an investment deduction on KSh 1.5 million of machinery that cleaned and repackaged imported rice, calling it manufacturing. Through three forums the ruling held that packaging alone is not making goods, the rice remained rice, and a definition framed with 'means' is exhaustive. The deduction was refused.
Tax and financial judgement Β· 4 min read Β· Paid
Lecture 124 Β· A contractor said the money was his clients', had no agreements to show it, and the assessment stood.
π»ππ πͺπππ πΉπππ: KRA billed MU-BEI KSh 1.7 million after its eTIMS invoices far exceeded its declared sales. The company said the money was clients' funds for materials, passed on as an agent, but had no written agency agreements and no reconciliation. The tribunal held VAT fell due on the invoices and dismissed the appeal.
Tax and financial judgement Β· 4 min read Β· Paid