Lecture 94 Β· The taxman called Cellnet's airtime commissions taxable after a ruling of his own, and the court held the exemption still stood.
π»ππ πͺπππ πΉπππ: Cellnet sold Safaricom airtime on a KRA ruling that the commissions were VAT-exempt, then faced a KSh 245 million demand when KRA changed its mind. The High Court held the exemption was in the statute's plain words and the old ruling still bound the taxman, though unseparated M-PESA income was taxable.
Illustration: Precursor
You sell a product the tax authority has ruled, in writing, is exempt from VAT, and you build your business on that ruling for years. Then the authority changes its mind, reclassifies what you do, and bills you hundreds of millions for the very commissions its own ruling had exempted.
Put yourself in the dealer's chair. When the authority reverses a ruling you relied on for years, can it tax what its own words once called exempt?
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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