Firm in Itare dam row ordered to pay Sh333,000 in taxes

An Italian firm at the centre of the row over the construction of a multi-billion Itare dam in Nakuru county has been directed to pay Kenya Revenue Authority (KRA) Sh333,320.

A four-member Tribunal chaired by Josephine Maangi ruled that CMC Di Ravenna should honour KRA’s demand saying the company was ill-advised that supplies made to an official aid funded project was zero rated.

“In view of the foregoing, we note that the alleged advise in the two letters dated December 20, 2016 and May 16, 2017 stating that the supplies made to an official aid funded project are zero rated was in contravention to the VAT Act 2013 as the same letters were issued after the law providing that such supplies were exempt, was enacted,” the Tribunal ruled.

The company had challenged the demand on the grounds that it had accumulated VAT input claims of Sh147 million, which it sought to use in offsetting the demand. The input VAT claims had not been validated by KRA.

The Tribunal held that KRA lawfully disallowed the Sh147 million input VAT for the year 2016-2017.

The company argued that in private ruling made on December 20, 2016, KRA allegedly stated that the supplies made to the applicant’s Itare Water Supply are zero rated.