The High Court has upheld tax assessments issued by the Kenya Revenue Authority for Withholding Tax and Corporation Tax against Space Investments Limited. The taxpayer had challenged the finding of the Tax Appeals Tribunal that money lent to it by its main director was subject to Withholding Tax on deemed interest.
The Taxpayer had also contested an assessment for Corporation Tax claiming that the gain it made for the sale of land in Karen to a related entity was not a trading gain rather a capital gain and therefore subject to Capital Gains Tax. That since Capital Gains Tax was under suspension in 2010 when the sale took place, no taxes were payable on the gain.
In dismissing the taxpayers appeal through a judgement dated 29th October 2021, the High Court agreed with the Authority that the taxpayer was in real estate business; the sale of land was made in the course of its business and the gain was an indication of a profit motive and therefore it was a trading gain subject to Corporation Tax.
The High Court therefore upheld tax assessments for both Withholding Tax and Corporation Tax aggregate amounting to Kshs. 823,770,478.
Commissioner of Legal Services & Board Coordination.