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.
Illustration: Precursor
Your clients give you money to buy materials for their projects, and you pass it to the suppliers, keeping only your fee. The money runs through your account and out again within hours. The authority compares your invoices and your bank with your returns, finds far more than you declared as sales, and bills you for the difference as though it were all your income.
Put yourself in the contractor's chair. When clients' money for materials passes through your account, is it tax-free, or taxable the moment you invoice it?
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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 123 Β· An employer filed withholding tax on a casual supervisor as if he were a contractor, and billed him millions.
π»ππ πͺπππ πΉπππ: KRA billed a casual site supervisor KSh 5 million after his employer used his PIN to declare withholding tax as though he were a contractor. His objection was late and struck out, but the tribunal, finding the employer had admitted the error, ordered the taxman to hear the matter afresh on its merits.
Tax and financial judgement Β· 4 min read Β· Paid