This archive report was first published on 23 April 2020.
On April 22, 2020, Choppies Enterprises Limited, a struggling supermarket chain in Kenya's competitive retail market, moved to court to stop the Kenya Revenue Authority (KRA) from freezing its accounts.
The Nairobi High Court, in a ruling reached by Justice David Majanja, upheld the decision by KRA to freeze Choppies' accounts over tax arrears amounting to 173.39 million shillings.
Justice Majanja held that Choppies had failed to disclose its financial position, including the amount held in its accounts and the proceeds from the sale of its assets, to the KRA.
As a result, the court ordered Choppies to provide security for the tax arrears before accessing its frozen accounts. The retailer and KRA have 14 days to explore an amicable settlement of the tax dispute.
Separately, the KRA has directed business owners trading on digital platforms to charge Value Added Tax (VAT) on their transactions and remit the taxes to the authority.
Commissioner for Domestic Taxes Elizabeth Meyo stated that KRA had noted with concern that some digital business owners had failed to charge VAT as required by law.
According to Meyo, the Finance Act 2019 clarifies that income from digital transactions is VAT payable. Non-compliant traders are advised to comply to avoid penalties and interests on outstanding taxes, failure of which will result in appropriate action being taken in accordance with the law.
