The Kenya Revenue Authority (KRA) has received a court order to demand more than Sh1.6 billion from a gold dealer who had contested its tax assessment about 10 years ago.
Justice Margaret Muigai agreed with KRA that Ushindi Ltd, formerly known as Ushindi Exporters Ltd, had failed to remit tax for gold sales worth Sh6 billion traded in 2010 and 2011.
The firm was believed to be trading in gold from DRC Congo.
But the company fought the KRA tax bill, saying it had not recorded its trading because it was buying the precious metal from many and scattered artisanal miners. The judge said the company is presumed to have complied with the law and kept records, identities of sellers and purchasers of gold and amounts of involved and funds before January 2012, when the exemption of identities of purchasers was allowed.
She said the letter by the Commissioner of Mines did not waive the company’s obligation to keep records and provide documents for tax assessment. “I find the Tax Appeals Tribunal properly directed itself in light of the evidence on record and the relevant legal provisions. The court concurs and upholds its finding that the appellant did not comply with Section 54A Income Tax Act,” the judge said.
The tax tribunal has asked Ushindi to pay the Sh1.6 billion based on KRA assessments.
In the appeal, the company objected to the assessments stating that they were not in a position to provide supporting documents for the cost of sales since they were buying gold from artisanal miners who normally declined to give their personal details or tax invoices.
The company further argued that they maintained records in accordance with the law, which only indicated the date of transaction, nature and weight of the precious metal and the price, without indicating the names or identities of the sellers.
The court also heard that the then Acting Commissioner of Mines, Mr Moses Masibo, had in 2012 waived the requirement for all licensed gold dealers from demanding the identities of suppliers.
But the argument was dismissed by Mr Collins Ngigi, representing the Department of Geology and Mines, who said the Act did not donate powers to Commissioner of Mines to waive the requirement to keep records.