Dates and Paperwork Decide Tax Fights: Kenyan Firms Win and Lose Against KRA
Key Highlights
- The Tax Appeals Tribunal ruled that Graphic Lineups must pay KSh 15.73M ($121,000) in VAT on an imported printing press, despite a Treasury undertaking to settle the bill.
- The High Court overturned KRA's KSh 221.2M ($1.7M) assessment against East African Seed in a 19 June 2026 judgment, finding the company's dated documents outweighed minor anomalies in its records.
- Treasury data cited by Business Daily put VAT expenditure, the revenue given up through exemptions, at KSh 204.5B ($1.58B) in 2024, down from KSh 242.6B ($1.87B) a year earlier.
- Mwenendo's reading is that dates and documents carry more weight than assurances, so firms claiming exemptions need records showing when goods arrived and which law applied.
A Treasury promise to pay a tax bill did not save a Kenyan printer from paying it, while a seed company that kept dated paperwork beat the taxman over a KSh 221.2M ($1.7M) assessment. Two 2026 rulings show that Kenya's tax exemption fights are won and lost on dates, and on what the paperwork says.
The Tax Appeals Tribunal ruled in September that Graphic Lineups Limited must pay KSh 15.73M ($121,000) in value-added tax (VAT) on an imported printing press, Nation reported.
The High Court went the other way for East African Seed in a judgment dated 19 June 2026, Business Daily reported, ruling against the Kenya Revenue Authority's (KRA) assessment on VAT and other taxes for 2016 to 2020. For importers and companies that restructure, the practical lesson is to know which date the law will use.
Graphic Lineups and the April 2020 cut-off
The Tax Laws (Amendment) Act 2020 took effect on 25 April 2020 and removed the VAT exemption for imported plant and machinery. Graphic Lineups argued that KRA had applied that change retrospectively to a press whose importation began earlier. The tribunal rejected the argument. It said what counts is the time the goods entered the country, not when importation commenced.
On that reasoning, a tax break is judged on the day goods arrive. If the law changes while a machine is on its way, the new law is the one that applies.
Why the Treasury's undertaking fell short
The company also pointed to a government promise. The Ministry of Industrialisation, Trade and Enterprise Development sent an exemption application to the Treasury in June 2020, and the Treasury wrote to KRA on 13 July undertaking to settle the KSh 15.73M ($121,000) VAT, the company argued. It said the Treasury had told KRA to release the machine without payment.
The tribunal held that the undertaking did not extinguish the company's statutory tax obligation. The ruling suggests that a ministry's request or a Treasury letter is not the same as a legal exemption, and that importers who rely on one may still be billed later.
East African Seed and the paper trail
East African Seed's case ran the other way. KRA assessed the company for KSh 221.2M ($1.7M) in VAT and other tax liabilities after an audit covering 2016 to 2020. The High Court found that the company had shown the business transfer happened before a change in tax law, so it qualified for VAT exemption. The court said the tribunal had given too much weight to minor anomalies and too little to the company's evidence.
The court also overturned KRA's withholding income tax demand for 2016 to 2019. It found the tribunal had not dealt with a gap in the law after Parliament repealed provisions that let KRA recover unwithheld tax from a payer, before similar powers returned in 2019. It also rejected KRA's attempt to impose withholding VAT liabilities for 2016, saying that applying the law backwards raised concerns about legal certainty and double taxation.
What exemptions cost the Treasury
Exemptions are not small change. Business Daily reported that Treasury data put VAT expenditure, the revenue the state gives up through VAT exemptions and reliefs, at KSh 204.5B ($1.58B) in 2024, down from KSh 242.6B ($1.87B) the year before. The figures suggest why KRA defends each assessment firmly.
The Kenyan Wall Street headlined a separate report that KRA lost a KSh 1.44B ($11.1M) VAT case over its own exemption. Mwenendo has not seen that ruling and does not rely on its details here.
What taxpayers and banks should watch
Mwenendo's reading of the two rulings is that dates and documents carry more weight than assurances. Companies that claim an exemption can protect themselves by keeping records that show when goods arrived, when a transfer took place and which law applied on that day.
Disputes between KRA and large taxpayers are not limited to imports. Mwenendo reported on I&M Bank's tax dispute win, where the tribunal cancelled a roughly KSh 713M ($5.5M) demand after finding that a KSh 1.3B ($10M) accounting reversal was not a loan write-off.
Businesses have also called for predictable tax policy rather than yearly shocks. Rulings like these show why: when the law moves, firms that cannot prove what they did before the change can end up paying. Mwenendo has not seen whether either side plans further appeals in the Graphic Lineups or East African Seed cases.
In Summary
- What did the two rulings decide?
- The tribunal made Graphic Lineups pay KSh 15.73 million ($121,000) in VAT on an imported press, while the High Court overturned KRA's KSh 221.2 million ($1.7 million) assessment against East African Seed.
- Why did the Treasury's promise not help the printer?
- The tribunal held that a Treasury undertaking to settle the VAT did not extinguish the company's statutory tax obligation.
- How can firms protect an exemption claim?
- Mwenendo's reading is that they should keep dated records showing when goods arrived, when a transfer took place and which law applied on that day.