KRA had demanded the hefty amount from Kenya Re arguing that it was to cover withholding tax that the reinsurer had not remitted for commissions and brokerage fees paid to its clients and reinsurance brokers, some of who are based outside the country.
Kenya Re now claims that the taxman’s failure to clarify the category under which the claim was made is reason enough to block the colossal tax claim slapped on it.
Firm holds that it is only liable for tax on local-based insurance companies, something it says it has complied with in its entirety.
NSE-listed re-insurance group Kenya Re has held that the taxman’s demand for Sh1.2 billion from the company is not based on any specific law.
The reinsurer reckons that the Kenya Revenue Authority (KRA) only stated the section of the Income Tax Act under which the July claim was made, but failed to give the specific category under which Kenya Re is liable for the claim.
KRA had demanded the hefty amount from Kenya Re arguing that it was to cover withholding tax that the reinsurer had not remitted for commissions and brokerage fees paid to its clients and reinsurance brokers, some of who are based outside the country.
Kenya Re now claims that the taxman’s failure to clarify the category under which the claim was made is reason enough to block the colossal tax claim slapped on it.
“The commissioner of domestic taxes has failed to clearly identify the category of payment under which it is claiming payment of withholding tax from commissions deducted by non-resident insurance companies and brokerage deducted by non-resident reinsurance brokers,” Kenya Re said.
The non-resident firms in question are based in the United Kingdom, India and Zambia. Managing director Jadiah Mwarania insists that the provisions of the Income Tax Act’s Section 35, on which the taxman based the claim, does not affect it as it refers to insurance companies, but Kenya Re is a reinsurer.
Mr Mwarania has also faulted the taxman for making the claim on the overseas firms, arguing that Kenya has double taxation treaties with the three countries which protects it from the taxes KRA has claimed from it.
KRA had in its suit papers said that Kenya Re could be taxed for the tax on commissions and brokerage fees to firms outside the country. The taxman had argued that the income was derived in Kenya hence the re-insurer was liable for taxation on the same.
The firm however holds that it is only liable for tax on local-based insurance companies, something it says it has complied with in its entirety.
Mr Mwarania has also argued that his firm has no control over the deduction of brokerage fees, as they are deducted by the insurance companies and brokers before
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
