Pwani Oil rejects Sh134m claim from the taxman

Pwani Oil has moved to the High Court seeking to stop the taxman from slapping it with a Sh134 million claim for allegedly failing to export goods marked for sale outside the country between 2012 and 2013.

In a suit filed Thursday, the consumer goods manufacturer wants the Kenya Revenue Authority (KRA) stopped from demanding the amount, claiming the taxman has refused to accept all evidence of tax compliance it has provided.

Manufacturers pay lower taxes on goods produced for export markets than those destined for sale locally, a policy incentive that KRA says Pwani Oil exploited to lower its tax burden.

“KRA’s demand is grounded on the insistence that only Pwani’s exports supported by certificates of export will be deemed duly exported, yet this is not a requirement by law. Pwani Oil has already paid the proper taxes, KRA now seeks to collect additional taxes amounting to Sh134,883,572,” the firm said in court filings.

Pwani Oil exports goods to over 15 countries, including Uganda, Tanzania, Malawi and South Africa.

The manufacturer insists that all the goods it had marked for export were indeed sold outside the country, and argues that despite offering documents to support its tax compliance KRA has still issued it with demand letters for the colossal amount.

The firm says the taxman has refused to deem some goods as exported until it furnishes it with certificates of export.

KRA is yet to respond to the claims raised by Pwani Oil in the suit.

The firm has claimed in its application that unless the court intervenes it may be forced to pay the sum, a move it says will paralyse its operations.

Pwani Oil says it has provided KRA with several support documents including export entries, cargo manifests, bills of lading among others, but that the taxman has insisted on it providing only the certificates of export.

It further claims that KRA turned down some certificates of export it supplied for some of the goods it sold outside the country.

“There are several other types of documents issued as proof of export which KRA cannot refuse to recognise as they equally merit consideration as sufficient proof,” added the firm.

Pwani Oil says the taxman’s refusal of the documents is unreasonable as they were issued by its officers.

The manufacturer’s managing director Anil Malde said in suit papers that the taxman watches the exportation process closely and that the process is accompanied by several documents hence KRA is wrong in insisting on only one document.

He added that after exporting the goods, KRA carried out an audit on his firm which did not raise any red flags and confirmed that no taxes were payable by the firm.

The audit also led to the cancellation of Pwani Oil’s security bonds. The bonds are taken by companies exporting goods in favour of the Government so that it can recover taxes in the event that a firm defaults on tax remissions.

“Having established that Pwani Oil had fully complied with the remission conditions, KRA duly approved the cancellation of the security bonds thus not only confirming its satisfaction with the fact of export but also confirming that no tax was payable by Pwani Oil,” said Mr Malde.