•The Insurer in its claim purported to offset its losses for year 2008 in the year 2009.
•The court ruled that the Tax Appeals Tribunal applied the law correctly and came up with proper decision based on the facts of the case
Madison Insurance will have to pay Kenya Revenue Authority Sh41 million in taxes, the High Court ruled on Tuesday.
The Court sitting in Nairobi dismissed the appeal filed by Madison against the Tax Appeals Tribunal’s Judgement dated May 26, 2017. It will pay the costs of the suit.
Justice Lucy Gitari ruled that the insurer could not purport to carry forward the losses suffered under life insurance business in the year 2008 as the law existing then prohibited in express terms carrying forward such losses.
“For these reasons, I find that the Tax Appeals Tribunal applied the law correctly and came up with proper decision based on the facts of the case. I have no reason to interfere with the decision by the appeals tribunal in its judgement “, the judge ruled.
I hold that the appeal is without merits and I dismiss it with costs, he added.
The Insurer in its claim purported to offset its losses for year 2008 in the year 2009. KRA disallowed the same and raised additional assessments for two years.
The Insurer then filed an Appeal at the Tax Appeals Tribunal, which was dismissed and KRA’s assessment upheld on grounds that Madison was not entitled to offset the life insurance business tax losses incurred prior to 1st January 2009 in its taxable income for the year 2009.
Madison challenged the ruling arguing that it was entitled to offset the accumulated life insurance business tax losses as at the end of the year 2008 in its taxable year of income for the year 2009.
KRA’s position was that the law could not be applied retrospectively and that only losses obtained from 1st January 2009 onwards could be offset but not those before.
The High Court reaffirmed KRA’s position and upheld the Judgement by the Tax Appeal Tribunal as having been sound and correctly based on the law and facts of the case.