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📋 Breaking It Down

A property firm has lost a Sh79 million tax battle against the Kenya Revenue Authority (KRA) after failing to produce records proving its ownership and loans during 2020 and 2021.

The Tax Appeals Tribunal upheld the KRA’s disallowance decision after finding the company, Fuse Holdings Limited, had not shown who owned the company during the period and whether loans from related companies were interest-free.

The Tribunal held that taxpayers challenging assessments must support their claims with evidence tied to the relevant years, rejecting Fuse Holdings Limited’s reliance on a 2025 annual return and unsupported assertions about its borrowings.

📌 What You Need to Know

It said historical claims in tax disputes must be supported by contemporaneous records, finding that Fuse failed to prove its shareholders were not non-residents.

The dispute arose from a KRA verification of Fuse’s corporation tax, value added tax(VAT),pay-as-you-earn (PAYE) and withholding tax affairs. KRA assessed the company at Sh45.8 million on June 30, 2025.

The assessment comprised Sh41.4 million in corporation tax, Sh4.2 million in VAT and Sh155,464 in withholding tax.

The parties later reached a partial settlement, reducing VAT to Sh94,138 and withholding tax to Sh17,380. Corporation tax was revised to Sh26 million, including principal tax, penalties and interest.

Only the Sh79.7 million interest disallowance remained before the Tribunal. KRA had disallowed Sh40.3 million in interest claimed for 2020 and Sh39.4 million for 2021.

Fuse argued KRA had applied the wrong law by using the 30 per cent earnings-before-interest, tax, depreciation and amortization test introduced by the Finance Act 2021.

📰 Source: Nation Africa