The Tax Appeals Tribunal has sided with Airtel Networks Kenya Ltd. in a customs valuation dispute with the Kenya Revenue Authority (KRA), effectively saving the telco over Ksh 11 million in additional taxes.
- •The case was centered on the import of network equipment from a South African company called NEC Africa (PTY) Ltd. — valued by Airtel — at Ksh 32.4 million in 2022.
- •The taxman, however, contested this valuation, asserting that Airtel had under-reported the customs value and recalculated the taxes based on comparable goods, leading to an additional tax demand of Ksh 11.3 million.
- •Airtel challenged the reassessment of their tax obligations, filing for a review on 9th May 2022, under the provisions of the East African Community Customs Management Act (EACCMA), which mandates that KRA respond to such applications within 30 days.
Despite the requirement, KRA failed to issue a formal decision on Airtel’s application within the stated period. In its defense, KRA argued that in a letter dated May 20, 2022, addressing an earlier Airtel inquiry, the authority had communicated its official decision.
The tribunal dismissed this claim, noting that the letter did not directly respond to the May 9th review application and lacked the legal markers of a formal decision under EACCMA.
“Due to the Respondent’s (KRA) failure to issue a Review Decision to the Appellant’s application dated on 9th May 2022, the Respondent was deemed to have made a decision to allow the application after the expiry of the statutory timeline of 30 days,” the tribunal noted.
The tribunal ultimately ruled out KRA’s demand, citing that Airtel’s review request was approved by the operation of law due to KRA’s procedural lapse.
“The upshot of the above analysis is that the Appeal is merited and succeeds. Consequently, the Tribunal makes the following orders; The Appeal be and is hereby allowed; The Respondent’s decision dated 28th July 2022 be and is hereby set aside,” the ruling concluded.
