The Tax Appeals Tribunal has thrown out an appeal by the Kiambu County Government challenging a KSh 612 million tax assessment by the Kenya Revenue Authority (KRA) in a landmark ruling that highlights the importance of procedural compliance in tax appeals.
- The controversy was about KRA’s audit of Kiambu County’s tax matters, which established non-compliance on several tax heads, including Pay As You Earn (PAYE), Value Added Tax (VAT), and Withholding Tax.
- The audit led to a tax demand of KSh 612,390,129 of which the county agreed to KSh 102,481,447.00 but declined to agree on the balance, leading to a formal appeal.
- The decision highlights a developing trend in Kenya’s tax adjudication landscape, where courts have consistently held that non-compliance with procedural necessities can nullify appeals, regardless of their inherent merits.
The Tax Appeals Tribunal tossed the appeal on the basis of a rule that requires taxpayers to pay admitted taxes in full before filing an appeal. Kiambu County had paid partially but not finalized the agreed sum or signed a finalized settlement agreement—an omission that proved fatal to its appeal.
“Procedure is not a formality—it is the basis of a functioning tax system,” the Tribunal noted in its ruling, “The Appellant’s failure to comply with clear statutory requirements undermines the jurisdiction of this Tribunal to entertain the appeal,” the ruling continued.
Kiambu County had insisted that the tax assessments were faulty, with the argument being that public service charges could not attract VAT according to Kenyan law. The county also took issue with the factoring in of PAYE on pool cars used for official duties and withholding taxes placed on certain transactions.
