Lecture 41 Β· Uchumi sold its flagship store to clear a bank debt, and still owed capital gains tax on a sale that left it nothing.
π»ππ πͺπππ πΉπππ: Uchumi sold its Ngong Hyper property for KSh1.4 billion, every shilling of which went straight to its bank, and argued there was no gain and an exemption was pending. The Tribunal and High Court held the tax was due, that applying for the exemption admitted it, and that hardship does not cancel a liability, confirming KSh64.3 million.
Illustration: Precursor
A company in crisis sells a flagship asset purely to repay a bank, so the proceeds never reach its own hands. It applies to the Treasury for an exemption from capital gains tax on the grounds that the sale was part of its rescue. The authority assesses the tax anyway.
Put yourself in the finance director's chair. When a forced sale leaves you nothing and the exemption is still pending, is the tax due now?
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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