Lecture 10 ยท Galaxy Tools bought from suppliers nobody could find.
๐ป๐๐ ๐ช๐๐๐ ๐น๐๐๐: KRA found that ten of a company's suppliers had no premises, no trading history and almost no other customers, and had been paid in cash. The Tribunal said valid invoices were enough. The High Court said invoices only open the argument.
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The case
Galaxy Tools Limited claimed input VAT, and a refund, on purchases from ten suppliers. When KRA looked for the suppliers, it found no offices, warehouses or shops. Their PINs had been registered at around the same time. Almost every one of them had a single customer: Galaxy Tools.
The payments had been made in cash. The delivery notes named no driver or vehicle and no delivery address. When KRA suspended the suppliers' PINs, not one of them complained. KRA concluded they were missing traders, entities created to issue invoices, and on 18 July 2018 it assessed KSh 1,698,702 in VAT and KSh 3,210,651 in corporation tax.
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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.
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