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Judge: Financial service providers are entitled to VAT exemptions
KRA had argued that Pesapal’s licence as a payment service provider authorised it to offer payment systems only, and the Tribunal was correct in holding so.
The High Court has set aside a decision by the Tax Appeals Tribunal, which had allowed the Kenya Revenue Authority (KRA) to claim Sh76.8 million from payment services firm Pesapal Limited on commissions earned, ruling that such firms are entitled to exemption from value-added tax (VAT).
Justice Rhoda Rutto stated that Pesapal, being a licensed payment service provider as defined under the National Payment System Act (NPSA), qualifies for VAT exemption as stipulated in the Act.
