Blunder Set to Cost KRA Ksh190 Million

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An empty court room.
  • The Kenya Revenue Authority (KRA) has been ordered to refund Unga limited Ksh190 million after the commissioner of Domestic Taxes went contrary to the guidelines

    The ruling was issued by Justice David Majanja who upheld the previous ruling by the Tax Appeal Tribunal.

     According to Judge Majanja, the KRA commissioner withdrew a letter of confirmation for a VAT tax refund claim meant for Unga Limited.

    “As a public body, the commissioner is required to act in good faith and in line with the precepts of fair administration,” the judge ruled.

    An empty court room.
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    Furthermore, he accused the commissioner of not establishing the errors that made the claim to be unverifiable.

    Unga Limited had filed a petition in 2015 seeking to be refunded their tax overpayments of Ksh190 million between the years of 1997 and 1999. 

    Initially, the taxman had informed the company in 2014 that their tax refund claims had been processed and pending at the Finance Department.

    However, it noted that all tax refund claims prior to the year 2013 had been put on hold by the National Treasury, but gave assurance to the company of the payments. 

    Furthermore, KRA requested the company to present all of its documents in order to ascertain its claims. According to Unga limited, all the information was provided except for the year 1998 whereby the company claimed it could not trace its documents. They, however, requested to resubmit their tax return in order to ensure all information was provided.

    Furthermore, in May 2015, the company also requested the tax authority to transfer part of its overpayment to offset its principal tax liability for the year 2010. In response to this, the KRA commissioner claimed that the company did not file its tax return for the year 1998.

    He also demanded the payment of the tax liability arguing that the transfer request was not possible.  Unga limited issued a response letter in October 2015, through its tax agents, claiming that it had indeed filed the tax return for the year in question but could not trace the documents. 

    The company moved to the Tax Appeal Tribunal to plead their case and certify that the tax refund claim letter had already been approved, processed, and confirmed for payment by KRA. 

    The taxman, however, disputed the claims arguing that no such approval had been made. It alleged that all documents had not been verified and thus would not approve such payments.

    The Tax Appeal Tribunal, however, ruled in favour of Unga Limited and decreed that the tax refund payment was due and also part of it would settle the tax liability for the year 2010.

    A court Gavel.
    A court Gavel.
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  • Source: KENYAGIST.COM

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