The Kenya Revenue Authority (KRA) is set to collect a tax of KShs. 107,046,316 following a decision by the Tax Appeals Tribunal on 28th May 2021 to dismiss an appeal filed by KCB Insurance Agency Limited.
The Taxpayer had contended that KRA’s treatment of its income earned from services provided to KCB Risk Margin Fund (RMF) as consultancy fees, which are subject to VAT, is erroneous.
The Taxpayer informed the Tribunal that KRA conveniently disregarded the fact that the Risk Margin Fund (RFM) services to KCB were provided by the Taxpayer, acting in the capacity of an insurance agent whose services were expressly exempt from VAT during the period under review.
KRA successfully defended its actions and informed the Tribunal that the Taxpayer’s claim that the fee on the administration of KCB Bank’s RFM is premium-based commission, which is exempted from Excise Duty is erroneous.
the tribunal reviewed the evidence as presented by both parties and held that KRA was authorized by the law to demand and charge late payment penalty and interest on VAT and Excise Duty not timeously remitted by the insurance agent.