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Kenya Revenue Authority has been allowed to collect Sh79 million from Standard Chartered Insurance Agency.
The Tax Appeal Tribunal upheld a decision of the Commissioner of Domestic Taxes and dismissed the agency’s appeal for failing to provide evidence to disprove KRA’s tax assessment.
The tribunal noted that during the proceedings to disprove the Commissioners tax decision their request to obtain certain documents from the agency were never met.
The commissioner conducted a compliance check on the agency’s income from 2015 to 2018 and on May 17,2019, they communicated its findings through a letter.
The agency did not respond making the commissioner issue a notice of assessment on July 11, 2019 with a tax demand of Sh87 million.
However, the agency objected the entire assessment which made the commissioner review and revised the tax downwards to Sh79 million.
Meanwhile, KRA has won a Kshs.234 million tax claim suit against Equity Bank Kenya Ltd after the High Court in Nairobi upheld the Tax Appeal Tribunal decision.
The tribunal decision was allowing KRA to charge the Bank Pay As You Earn on Employee Stock Ownership Plan (ESOP).
The court agreed with KRA’s submissions that the ESOP confers a benefit to an employee and the benefit to the employee arises from the fact that value of shares, whether or not they are issued at a discount, would ordinarily appreciate at the time of vesting.
The group had filed an Appeal against the judgment of the Tribunal delivered on 19th December 2019 upholding the KRA’s move.
KRA had carried out a tax compliance audit of the Bank’s records with regard to Corporation Tax for the year of income 2015, Excise Duty for the period covering August 2013 to December 2015 and PAYE taxes for the year of income 2016.
The authority then issued an assessment on 21st June 2017 for Kshs.1,738,969,276 inclusive of penalties and interest amounting to Kshs. 346,147,520 on account of Corporation Tax, Kshs. 234,138,308 on account of PAYE and Kshs.1,158,683,449 on account of excise duty.
KRA contended that the Bank operates an ESOP where employees are given an opportunity to acquire the bank’s shares at discounted prices.
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