KRA asks court to reject Carrefour’s VAT nullification push

Industry

KRA asks court to reject Carrefour’s VAT nullification push


KRA-HQ

KRA headquarters at Times Tower in Nairobi. FILE PHOTO | NMG

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Summary

  • In response to the case by the retail chain owned by Majid Al Futtaim Hypermarkets, KRA says the petition is misplaced.
  • The retail chain had challenged the legislative authority of KRA to publish the guidelines saying they do not comply with the procedural requirements applicable to the Statutory Instruments Act.
  • KRA had initially blamed the retail store for causing the delay in tax refund, saying it has failed to furnish the required documents to facilitate the refund.

Kenya Revenue Authority has asked the High Court to dismiss a petition filed by French retail chain Carrefour seeking to declare guidelines and section 17 (2) (b) of the VAT Act unlawful.

The legal provisions govern the reconciliation of inconsistencies by KRA’s iTax system between purchase invoices and sale invoices.

The retailer says the taxman’s new automated system that compares VAT refunds between suppliers and buyers is picking up human errors and lump sum filling as tax leakages and raising disputed claims.

In response to the case by the retail chain owned by Majid Al Futtaim Hypermarkets, KRA says the petition is misplaced.

The parties have been embroiled in a Sh443 million tax dispute. The taxman says the supermarket operator’s tax liability has since been reduced to Sh41.2 million.

“We further submit that the system is in compliance with section 44 of the VAT Act and section 28 of the Tax Procedures Act, noting that ICT and automation is a key enabler of the Big Four Agenda,” the taxman said.

The retail chain had challenged the legislative authority of KRA to publish the guidelines saying they do not comply with the procedural requirements applicable to the Statutory Instruments Act.

KRA, however, says the guidelines were issued to facilitate the automated return verification module in the taxman’s iTax system after moving from the previous manual verification mode.

KRA had initially blamed the retail store for causing the delay in tax refund, saying it has failed to furnish the required documents to facilitate the refund.

The French firm raised an objection in 2019 and supplied KRA with hundreds of invoices each month without getting a resolution even as the disputed tax claim continued to incur an additional Sh65 million interest.

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