Tribunal orders taxman to refund Tullow Sh488m

The Kenya Revenue Authority (KRA) has been ordered to pay Tullow Kenya Sh488.2 million tax refund arising from crude oil exports under the Early Oil Pilot Scheme (EOPS) in 2019.

KRA had thrown out the tax refund claim saying Tullow used a wrong format by filing the claim manually instead of using iTax and for making the claim out of time.

The Tax tribunal however overturned KRA’s decision saying at the time the filing was made, there were no explicit requirements to file tax refunds online and that KRA had not specified the form of filing the claim and allowed Tullow to ask for the refund.

“Quite frankly, it is unfair, irrational even, for the respondent to reject the appellant’s application at the time it did and then over and above that mislead the taxpayer on the appropriate form for relief claims, when in fact the form prescribed by the law was not in existence,” the Tribunal ruled.

In the first phase of EOPS, the company exported some 250,000 barrels at Sh1.48 billion but the second phase was then bogged by bad roads in Turkana that were made impassable by flooding.

“KRA is hiding behind technicalities to frustrate Tullow’s claims contrary to the provisions of the constitution…KRA is hereby directed to reconsider Tullow’s application taking into account the relevant factors in light of lack of a prescribed form described under Section 18 (3) of the VAT Act 2013,” the Tribunal led by Mahat Somane said.

Tullow dispatched its first oil in August 2019 and declared its return as VAT zero rated sales.

The firm claims that prior to the registration it had incurred VAT of Sh488.2 million and lodged the claim with KRA which allows such claims to be filed within three months.