TAXMAN OPPOSED APPLICATION

KRA wins Sh1.1bn tax case against Oxygen 8 East Africa Limited

Moves follows a KRA audit against the firm between July 2015 and February 2019.

In Summary

• This comes after an application seeking an extension to file an appeal out of time filed by Oxygen 8 East Africa Limited was dismissed.

• 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 the company was invalid.

KRA headquarters
KRA headquarters
The KRA headquarters at the Times Towers.
The KRA headquarters at the Times Towers.
Image: FILE

The Kenya Revenue Authority is set to collect a tax of over Sh1 billion following a decision by the Tax Appeals Tribunal on September 11, 2020.

This comes after an application seeking an extension to file an appeal out of time filed by Oxygen 8 East Africa Limited was dismissed.

In a statement released on Wednesday, KRA stated that it did an investigation audit against Oxygen 8 East Africa Limited for the period July 2015 – February 2019 and raised an assessment for Sh1,185,596,692 for withholding tax which was confirmed vide an objection decision on May 21, 2019.

 
 
 

"Aggrieved by the decision of the KRA, Oxygen 8 East Africa Limited filed a Notice of Appeal at the Tax Appeals Tribunal but failed to file a Memorandum of Appeal within time, the Commissioner for Legal Services and Board Coordination, Paul Matuku said.

 

He added that Vide an application dated June 26, 2020, Oxygen 8 East Africa Limited 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 Limited was invalid.

The Tax Appeals Tribunal delivered a Ruling on September 11, 2019, where it ruled that its power to extend time is donated by statute i.e. 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; absence from Kenya, sickness or any other reasonable cause.

"Consequently, the Tax Appeals Tribunal ruled that Oxygen 8 East Africa Limited had failed to provide an affidavit stating the reasons for its inability to submit the requisite documents on time," Matuku said.

Further, the Tax Appeals Tribunal ruled that the Notice of Appeal filed was invalid on the ground that Oxygen 8 East Africa Limited had acknowledged and expressed commitment to pay Sh.986, 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.

 

To this end, the Tax Appeals Tribunal ruled “…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 can now proceed to collect the outstanding taxes from Oxygen 8 East Africa Limited.

KRA said it shall apply the same decision to oppose 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.