Couple Ordered to Pay Ksh9 Billion to KRA

  • Kenya Revenue Authority signage on a building
    Kenya Revenue Authority signage on a building
  • A businessman lost Ksh 9.3 billion to the Kenya Revenue Authority (KRA) after a tribunal rejected the tycoon’s appeal and ruled in favour of the taxman, on Friday, January 22. 

    Paleah Stores Ltd, owned by an Embu-based couple, wanted the Tax Appeals Tribunal to dismiss KRA's Ksh 1,361,746,295 corporation tax and Ksh 7,891,387,842 in value-added tax (VAT) inclusive of interest and penalties.

    KRA penalised the businessman after accusing him of failing to pay tax for six years, between 2008 and 2014. 

    The case had dragged in court since 2017 when the tycoon filed the appeal against the taxman.

    An empty court room.
    An empty court room.

    Commissioner, Legal Services and Board Coordination Paul Matuku argued that KRA adhered to the law while investigating the case. 

    She added that KRA received a tip-off from a concerned citizen before it sought the trader's bank statements and details from his suppliers.

    The documents sealed the trader’s fate as they contradicted the businessman's statements. She also blamed the trader for failing to keep proper records needed for tax computation. 

    Paleah owner, differed with KRA, arguing that he was to pay Ksh 34.8 million only as tax after he made his own analysis and review of the documents. 

    "The corporation tax (Ksh 7 billion) was ill-advised, malicious and irrational and KRA failed to consider our Ksh 1.58 billion operating expenses. Collecting taxes should not discourage taxpayers from carrying on with their business," the businessman's lawyers lamented. 

    The Tribunal, led by Chairman Josphine Maang, Geofrey Karuu and Delilah Ngala threw out the businessman's appeal and ordered him to pay KRA Ksh 9.3 billion the taxman demanded. 

    They ruled that Paleah owners had not complied with its statutory obligations of storing and availing proper records for tax analysis forcing KRA to reach out to banks and suppliers. 

    "In absence of complete records, the appellant and the respondent agreed to use the banking method to compute income for corporation tax, sales for output tax and purchases for input VAT. 

    “We find the appellant (Paleah Store Limited) has failed to make a case against the respondent (KRA) on account of the alleged unfairness and breach of Article 47 of the Constitution,” the tribunal declared.  

    Times Towers in Nairobi which houses Kenya Revenue Authority’s head office. Thursday, February 20, 2020.
    Times Towers in Nairobi which houses Kenya Revenue Authority’s head office. Thursday, February 20, 2020
    Simon Kiragu