KRA to collect Sh 1.6B from Rift Valley Railways Kenya Ltd after losing appeal


The tax appeals tribunal has ordered the Rift Valley Railways Kenya Limited to pay Kenya Revenue Authority Sh 1.6 billion tax.

In its judgment, the tribunal ordered the railways company to opay Sh 1,639,516,383 comprising custom duty, value added tax, withholding tax, income tax and withholding value added tax.

However, the company got a reprieve after the tribunal reduced the tax by Sh 56,717,291 after they provided the requisite supporting documents.

“The appellant’s withholding tax liability in respect of local and imported services should be reduced by Sh  56,717,291 for which it has correctly supported,” the tribunal ruled.

The company had appealed against KRA’s tax assessment contained in an objection dated 11th december 2017 following an audit conducted for the years 2011 to 2016.

The Railways Company argued that it was granted an exemption or a waiver from taxes by the Government of Kenya on the importation of locomotives to Kenya. However, the KRAt alleged that the exemption or the waiver that was granted to the Appellant was either not correctly obtained or that it was not applicable to the goods they imported.

The appellant further submitted that it was being reprimanded merely because of an internally generated error on the part of the Treasury. Further, there was no part of the approval/exemption letter by the Ministry that rejected or refused to grant the appellant’s application for waiver or exemption. 

“The exemption letter should have been a complete reflection of what had been approved by the Minister,” KRA responded.

Rift Valley Railways Kenya Limited is a Consortium that was established to manage the Parastatal Railways of Kenya and Uganda as well as to carry out with major investments

going towards expanding and modernizing the fleet and improving rail infrastructure including the meter-gauge line to Uganda.