KCB Insurance Agent Loses Ksh107M Tax Battle

The Kenya Revenue Authority (KRA) is set to collect tax of KShs. 107,046,316 following a decision by the Tax Appeals Tribunal on 28th May  2021 to dismiss an appeal filed by KCB Insurance Agency Limited. 

The Taxpayer had contended that KRA’s treatment of its income earned from  services provided to KCB Risk Margin Fund (RMF) as consultancy fees, which  are subject to VAT, is erroneous. 

The Taxpayer informed the Tribunal that KRA conveniently disregarded the  fact that the Risk Margin Fund (RFM) services to KCB were provided by the  Taxpayer, acting in the capacity of an insurance agent whose services were  expressly exempt from VAT during the period under review. 

KRA successfully defended its actions and informed the Tribunal that the  Taxpayer’s claim that the fee on administration of KCB Bank’s RFM is  premium-based commission, which is exempted from Excise Duty is  erroneous. 

The Tribunal reviewed the evidence as presented by both parties and held that  KRA was authorised by the law to demand and charge late payment penalty  and interest on VAT and Excise Duty not timeously remitted by the insurance  agent.

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