Dutch Flower Firm ordered to pay Ksh.1.3 billion in taxes

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Kenya Revenue Authority (KRA) has won a case to collect taxes worth Ksh.1.3 billion from Van Den Berg limited, a Dutch flower firm operating in Kenya.

The firm was ordered to pay KRA after the High Court in Nairobi dismissed a judicial review application filed by the company in April, 2016 seeking to quash a tax assessment issued by the Commissioner of Domestic Taxes.

In a ruling delivered online, Justice J.M.Bwonwong’a found that the company had not exhausted the dispute resolution mechanism provided under Section 12 of the Tax Appeal Tribunal Act. Justice Bwonwong’a stated that, a party may only be excused from complying with the provisions of the said section if it demonstrates that the Tax Appeal Tribunal was ineffective or that there were exceptional or unusual circumstances in its application to warrant the filing of the Judicial Review Application.

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The company had been selected by KRA for a tax audit for the tax period 2008 to 2013, and on conclusion of the audit, KRA issued a Notice of Assessment of Kshs 1,340,142,438 in respect of Van Den’s Corporation tax (including Transfer Pricing), Withholding Income Tax, Value Added Tax, Pay As You Earn (PAYE) and KEBS Levy.

Van Den then filed the Case challenging the assessment and the objection decision by the Commissioner of Domestic Taxes. KRA opposed the Case and raised a preliminary objection that Van Den had not exhausted the dispute resolution mechanism available under The Tax Appeals Tribunal Act and that the High Court could not handle the case when there were other alternative methods of dealing with the dispute.

The High Court in its ruling agreed with KRA’s position and ruled that the issues before it were not of a judicial review nature and ought to have been litigated before the Tax Appeals Tribunal.

The Court further found that the onus was on Van Den to demonstrate that it had exhausted the available dispute resolution mechanisms in the Tax Appeals Tribunal.

The Van Den Case was therefore struck out and costs awarded to KRA.

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