Lecture 37 Β· LG billed its marketing to Dubai and never paid the local agents, and a KSh2.66 billion demand collapsed.
π»ππ πͺπππ πΉπππ: KRA taxed LG's Kenyan marketing at 16% because Kenyans saw the adverts, and demanded withholding tax on local agents. The courts held the service was contracted to the Dubai head office and so exported at 0%, and that withholding tax falls only on payments the Kenyan company itself makes.
Illustration: Precursor
Your Kenyan branch runs advertising that Kenyans plainly see, but your client for that work is your own head office abroad, which also pays the local agents directly. The authority taxes the marketing as a local supply and demands withholding tax on the agents.
Put yourself in the branch tax manager's chair. Is the service local because the audience is local, and do you withhold on payments you never made?
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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