Pwani Oil says it is entitled to tax exemptions for goods intended for export. PHOTO | FILE
Pwani Oil has lost a court fight to quash a Sh134 million tax demand from the Kenya Revenue Authority relating to a dispute in which the manufacturer is accused of having diverted goods meant for export into the local market.
Justice Weldon Korir last week ruled that only the KRA’s tax appeals tribunal can determine whether Pwani Oil owes the massive tax claim. Pwani Oil had separately filed an appeal before the KRA tribunal.
The judge held that it is the duty of the tribunal to go through all documents provided as evidence and make a determination on the dispute.
Pwani Oil said it had a legitimate expectation that it would be entitled to certain tax exemptions for the goods intended for export, but KRA claims the firm instead sold the products locally.
Justice Korir ruled however that the legitimate expectation doctrine in Pwani Oil’s case only applies where the KRA has promised to exempt it from the disputed revenue. He added that legitimate expectation cannot apply where the promised end in conflicts with the law.
“There must be an express promise given for the doctrine of legitimate expectation to be applied. Legitimate expectation cannot be applied against provisions of the law. The tribunal is the one to go through documents and make a determination. Considering the above, Pwani Oil’s case must fail,” Justice Korir ruled.
Pwani Oil Products Limited filed the suit in December 2014 claiming that the KRA 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.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
