The Tax Appeals Tribunal has given Kenya Revenue Authority (KRA) a nod to demand and collect Kshs. 1.2 billion in taxes from an international communications firm.
The tax tribunal at Nairobi dismissed an application by Oxygen 8 East Africa Limited, seeking extension to file an appeal out of time to contest the tax debt. The tax dispute arises from KRA’s investigation audit against the firm for July 2015 to February 2019 that raised an assessment of Kshs. 1,185,596.692 for withholding tax. The assessment was confirmed vide an objection decision on 21st May, 2019.
Aggrieved by the KRA’s decision, Oxygen 8 East Africa Ltd filed a Notice of Appeal at the Tax Appeals Tribunal but failed to file a Memorandum of Appeal within time. On 26th June 2020, the firm sought for extension of time to file its Memorandum of Appeal and Statement of Facts on the grounds that its Managing Director was absent from the country and instructions were received by its tax agents after the expiry of time.
KRA opposed the Application on grounds that it was incompetent for failure to include a supporting affidavit and that the Notice of appeal filed by Oxygen 8 East Africa Ltd was invalid.
The Tribunal had on 11th September, 2020 ruled that its power to extend time is donated by Section 13 (3) of the Tax Appeals Tribunal Act and in determining an application for extension of time it is guided by the Tax Appeals Tribunal Act and the Tax Appeals Tribunal (Procedure) Rules 2015 which requires that an Application for an extension of time to be accepted, a party must meet the conditions such as absence from Kenya, sickness and any other reasonable cause.
Consequently, the Tax Tribunal ruled that Oxygen 8 East Africa Ltd had failed to provide an affidavit stating the reasons for its inability to submit the requisite documents on time.
Further, the Tribunal ruled that the Notice of Appeal filed was invalid on the ground that the firm had acknowledged and expressed commitment to pay Kshs.986, 780, 780,277 but had not entered into an arrangement with the KRA to pay the sum at the time of lodging the Notice of Appeal.
The Tribunal in its ruling stated that “…in its own admission, the Applicant has an undisputed tax liability which is unpaid and it has not demonstrated to us that it has offered any payment plan for the same which is acceptable to the Respondent.”
KRA shall apply the same decision to similar applications for extension of time for future disputes affecting other taxpayers who do not submit the requisite documents in an application for extension of time.