FIRM'S REQUEST DISMISSED

KRA wins Sh1.2bn tax suit against Oxygen 8 East Africa company

Oxygen 8 East Africa Limited sought extension to file an appeal out of time to contest its tax arrears.

In Summary

• Tribunal had on September 11 ruled that its power to extend time is donated by Section 13 (3) of the Tax Appeals Tribunal Act.

• The company filed a notice of appeal at the Tax Appeals Tribunal but failed to file a memorandum of appeal within time.

KRA headquarters
KRA headquarters
Image: FILE

Kenya Revenue Authority has been allowed to demand and collect Sh1.2 billion taxes from an international communications firm following a Tax Appeals Tribunal’s ruling.

The tribunal dismissed an application by Oxygen 8 East Africa Limited that sought extension to file an appeal out of time to contest its tax arrears.

The dispute arises from KRA’s audit on the firm for July 2015 to February 2019 that raised an assessment of Sh1,185,596.692 for withholding tax. The assessment was confirmed vide an objection decision on May 21, 2019.

 

Aggrieved by KRA’s decision, the company filed a notice of appeal at the Tax Appeals Tribunal but failed to file a memorandum of appeal within time.

In June, the firm sought 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.

But KRA opposed the application saying it was incompetent for the firm to fail to include a supporting affidavit and that the notice of appeal filed was invalid.

The tribunal had on September 11 ruled that its power to extend time is donated by Section 13 (3) of the Tax Appeals Tribunal Act.

The Tax Appeals Tribunal Act and the Tax Appeals Tribunal (Procedure) Rules 2015 require that for 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 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, it ruled that the notice of appeal filed was invalid on the grounds that the firm had acknowledged and expressed commitment to pay Sh986,780,780,277 but had not entered into an arrangement with KRA to pay the sum at the time of lodging the notice. 

 

“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,” the tribunal ruled.