The Kenya Revenue Authority (KRA) has been given permission to demand Ksh643 million in tax after the Tax Appeal Tribunal denied an appeal filed by the Central Rift Valley Water Development Agency to overturn a Ksh643,394,426 withholding tax assessment.
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The charge is based on the agency’s inability to deduct taxes when it paid CMC Di Ravenna, an Italian firm hired to complete the Itare Dam Water Supply Project, and Aspen International SPRL, a Belgian firm hired to complete the Sabor Iten Tambach Water Supply Project.
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Also Read: The two foreign firms were not tax free in Kenya, according to KRA, and the project’s activities were in the type of management and professional services, which are subject to Withholding Tax under the Income Tax Act.
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The Central Rift Valley Water Development Agency said that it was not responsible for making payments to the two foreign corporations and was just acting as an implementing entity evaluating the works and providing interim payment certificates.
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The Tribunal determined that the two foreign corporations were not tax-exempt, and that the Agency should have included the amount to be withheld in the payment certificates it prepared, but did not.
The Tribunal also dismissed the Appeal, finding that KRA was correct in requesting the assessed taxes of Ksh643,394,426.
