The Kenya Revenue Authority (KRA) is set to collect Ksh. 1.4 billion from a rice wholesaler. This is after the firm, Jhulay LAL Commodities Ltd. lost an appeal is filed before the Tax Appeals Tribunal which dismissed it on grounds that the firm had failed to prove that Kenya Revenue Authority’s (KRA) assessment was excessive.
Jhulay LAL Commodities Ltd. appealed the decision of KRA contesting that the entire tax of Ksh. 1,456,433,604.00 demanded. The main grounds of the appeal was that the Commissioner determined the taxable income based on the firm’s gross bankings against the basic accounting principles and tax law.
Jhulay LAL’s principal activity is the wholesale and retail sale of rice sourced from Pakistan.
According to KRA Commissioner in charge of Legal Services and Board Coordination, Mr. Paul Matuku, KRA successfully argued that it made the assessment after an investigation revealed several irregularities including unexplained bank deposits and that the sales of the rice exceeded the amounts imported.
“The Tribunal reviewed the evidence as presented by both parties and held that KRA exercised its powers judiciously to make the decision based on the material before it.”, said Mr. Matuku.
The firm’s loss of appeal comes at a time when the KRA is enhancing tax compliance measures in order to increase revenue collection.
At the start of the 2020/2021 fiscal year, the National Treasury set out to collect Ksh. 1.89 trillion in ordinary revenues. To achieve that target, KRA is implementing a number of revenue enhancement measures that include tax base expansion, enhancement of debt recovery programme, implementation of post clearance audits, comprehensive audit of all exemptions, enhanced scanning and intelligence led verification of cargo at the ports of entry and internally.
The KRA is also reaching out to taxpayers with tax disputes to embrace Alternative Dispute Resolution (ADR) for faster resolution. Last month, the KRA said it had collected over Ksh. 21 billion through out-of-court deals reached through its Alternative Disputes Resolution (ADR) mechanisms.
