The Kenya Revenue Authority (KRA) has been granted permission to collect tax from Gulsan Insaat Turizm Nakliyat Ve Ticaret A.S. following a decision by the Tax Appeals Tribunal dismissing the company’s tax assessment objection.
The Tax Appeals Tribunal issued the ruling after the determination of an Appeal filed by Gulsan Insaat Turizm Nakliyat Ve Ticaret A.S (‘Gilsan Insaat’). Gulsan Insaat is a Kenyan branch of the parent company Gulsan InsaatTurizm Nakliyat Ve Ticaret A.S incorporated in Turkey carrying on the business of a specialized contractor dealing in construction of Roads and Railways.
KRA conducted a compliance check on Gulsan Insaat for the period 2014 – 2017 with respect to a contract awarded by the Government of Kenya to Gulsan Insaat Turizm Nakliyat Ve Ticaret A.S Turkey to construct Merille – Marsabit Road.
Variances established
Upon conclusion of the audit, KRA confirmed an assessment for Sh 19million for Corporation Tax through its objection decision issued on October 16, 2019. Gulsan Insaat filed an Appeal at the Tax Appeals Tribunal seeking to set aside the assessment stating that the same was erroneous.
The authority then opposed the appeal on grounds that Gulsan Insaat did not declare its total revenue as per the final certificates for the project. The assessment was thus based on the variances established from income reported in the self- assessment returns as compared to the final financial statements of accounts with Kenya National Highways Authority (KENHA) on construction work done during the period of the project.
The Tax Appeals Tribunal delivered its judgment on 21st May 2021 ruling that Gulsan Insaat ought to have explained with evidence how its declared revenue from KENHA differed from incomes declared in its self-assessment returns and statement of accounts.
Consequently, the Tax Appeals Tribunal ruled that Gulsan Insaat failed to discharge its burden of proof as required by law as no evidence was provided to disproof KRA’s tax assessments. KRA in its tabulations used certificates from KENHA which Gulsan Insaat failed to rebut with evidence.
