The Kenya Revenue Authority (KRA) has suffered a major blow after the Tax Appeals Tribunal (TAT) barred it from demanding the money.
KRA demanded Sh787.87 million of taxes from the local trader who operates a fuel station and provides transport services for the United Nations.
The tribunal declared the demands as erroneous.
“The objection decision dated the 30th June, 2020 is hereby struck out, the Respondent shall be at liberty to undertake any tax audit and assessment on the affairs of the appropriate Appellant,” TAT said in its ruling.
KRA was asked to revisit and undertake a more in-depth and focused tax audit and assessment.
The taxman was also directed KRA to resolve the irregularity on the use of Abdi Amin’s national ID number to register two Personal Identification Numbers (PIN) saying that the irregularities cast doubts on the proper tax records for the trader.
KRA registered Abdi on July 6, 2007 but issued the same PIN to him on June 17, 2019.
KRA had demanded Sh512.92 million for income tax and Sh274.95 million for Value Added Tax in revenues generated from his petrol station and transport services rendered to the United Nations for the period 2016 to 2019.
KRA claimed that Abdi had filed tax returns from his businesses in 2015, 2016 and 2017 but filed nil returns the following year, after receiving over Sh5 million in payments from his businesses.
Despite Abdi’s request to be given four months to provide documents supporting his objection, KRA rejected setting the stage for enforcement action that include property seizure and agency notices to recover the money if he failed to pay the taxes.
The economy disruption has hurt KRA’s revenue collections from the payroll and corporates.