Taxman gets nod to collect Sh1.2bn from bulk SMS firm

The Kenya Revenue Authority (KRA) has been allowed to collect tax amounting to Sh1.18 billion from a digital betting firm arising from unpaid taxes over a period of four years.

A five-member Tax Appeals Tribunal led by the chairman Eric Wafula ruled that Oxygen 8 East Africa Ltd failed to attach on time documents, seeking to be allowed to challenge KRA’s assessment.

Oxygen 8 is a digital company that deals in text message (SMS) value-added services and mobile financial services. The company offers bulk SMS, branding, among other services.

Documents filed before the tribunal show that KRA did an audit of the firm from July 2015 to February 2019, raising an assessment of Sh1.18 billion for withholding tax. The firm contested the assessment before the tribunal, but delayed in filing its documents challenging KRA’s bill. The firm later sought an extension to file the case out of time, an application which was opposed by KRA.

“In view of the above, the Tribunal holds that there is no affidavit by the Applicant and or its representative stating the reasons for its inability to submit the requisite documents on time and without which our hands are tied,” the Tribunal ruled.

According to the Tribunal, an application for the extension of time, must be supported by an affidavit stating the reasons for failing to submit the application on time. “We note that the requirement in law is couched in mandatory terms,” the Tribunal said.

The firm said it could not file its statements arguing that the managing director was out of the county.

The firm later sought to be allowed to file the appeal out of time, an application KRA opposed. The taxman also argued that the application was a nullity because the firm failed to include a supporting affidavit, stating the reasons for the delay.

The tribunal agreed saying the reasons for the delay must be explained in an affidavit. The Tribunal also noted that the firm had acknowledged and expressed commitment to pay 986.7 million but failed to table a payment plan.