Mars Logistics pressed to pay Sh106m tax arrears

By Nancy Gitonga
Thursday, January 14th, 2021
Digital tax.
In summary

The Tax Appeal Tribunal’s (TAT) has been allowed to demand Sh106 million tax arrears from Mars Logistics Limited will pay after Justice John Mativo dismissed an appeal contesting Value Added Tax (VAT) charges on transportation services among other claims.

The firm had contested Tax Appeal Tribunal’s (TAT) decision that transportation of goods in transit attracts VAT at the rate of 16 per cent.

Earlier TAT had also held that transportation services terminated outside Kenya are not exported services and thus taxable.

However Justice Mativo, while dismissing the appeal, said there was no basis to fault the findings of the tribunal.

“I find that this appeal fails. The upshot is that I dismiss this appeal with no orders as to costs,” Mativo said.

In the decision of the High Court last week the First Schedule to the VAT Act, 2013 exempts VAT from services offered in relation to goods in transit.

In it’s decision on February 27, 2018, TAT ruled that Mars sole business license offered transport services for transit goods that were taxable under the VAT Act. 2013.

It therefore dismissed an appeal by the logistics company against the commissioner of domestic taxes on their tax assessment for the years 2013 to 2015 demanding Sh105,693,847.

In the amount, VAT was valued at Sh 82,982,244 and income tax was valued at Sh 82,982, 244.

The tribunal had further held that the company was not entitled to claim exempt status for the sale of motor bikes because they were not exempt.

In the decision of the High Court last week, the court held that under the VAT Act 2013, the determination of whether the services are exported out of the country is that the same must be for consumption outside Kenya.