Lecture 48 Β· Bboxx lost the argument over its business model and still beat a KSh780 million bill.
π»ππ πͺπππ πΉπππ: KRA recharacterised Bboxx's solar leases as hire purchase and added KSh1.5 billion of income with a 30% mark-up. The tribunal agreed on the model but found the method arbitrary and double-counted, and set the KSh780 million assessment aside in full.
Illustration: Precursor
Your company sells solar systems on instalments and accounts for them as leases, paying tax on the rentals. The tax office says the arrangement is really hire purchase, applies a mark-up to your stock in the field, and conjures a large block of under-declared income on top of the revenue you already reported.
Put yourself in the finance director's chair. If the authority is right about the model but wrong about the arithmetic, where does that leave the assessment?
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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