The Kenya Revenue Authority (KRA) is set to collect Kshs. 35 Million in taxes from BTB Insurance Brokers Limited following a decision in its favor by the High Court. This follows an appeal filed by BTB Insurance Brokers Limited in 2017 against a decision made by the Tax Appeals Tribunal in 2016.
Between July 2013 and September 2014, BTB Insurance Brokers Limited failed to charge Excise Duty on its commission income contrary to the provisions of the Customs and Excise Act. This led KRA to raise an Excise Duty demand of Kshs. 35,788,553.
Aggrieved by the demand, BTB Insurance Brokers Limited appealed to the Tax Appeals Tribunal in 2016. The Tax Tribunal affirmed KRA’s tax demand and BTB Insurance Brokers Limited was ordered to pay the taxes due.
Subsequently, BTB Insurance appealed to the High Court
The High Court ruled that KRA’s demand was constitutionally sound and in line with a previous decision in a case filed by Association of Kenya Insurers dealing with a similar issue where Justice Majanja ruled that KRA’s action of demanding taxes did not violate its member’s right to fair administrative action under Article 47(1).
The High Court further ruled that the onus of charging and remitting Excise Duty was on BTB Insurance Brokers Limited since it is licensed under the Insurance Act and is a financial institution under the Finance Act 2013. This is a big win for KRA since it can now proceed to collect the outstanding taxes from BTB Insurance.
Further, KRA is set to apply the same decision to unlock revenue due from other industry players who had challenged similar decisions by the Tribunal by appealing to the High Court and who were awaiting the court’s determination, in this matter.