Tax Appeals Tribunal Upholds Sh390 Million KRA Claim Against Transfleet EPZ

The Tax Appeals Tribunal has affirmed a Sh389.8 million tax demand against Transfleet (EPZ) Limited, a warehouse and transport company, following the firm’s failure to demonstrate that it properly objected to the Kenya Revenue Authority (KRA) assessment.

The dispute stems from a KRA investigation covering Transfleet’s tax filings from 2016 to 2021. KRA’s inquiry included analyzing the company’s iTax declarations and reviewing tenancy contracts and payment details from five tenants, alongside bank deposits in four Stanbic Bank Kenya accounts where rent was paid in US dollars.

KRA’s findings, dated May 22, 2023, identified additional taxable income amounting to Sh389.8 million, excluding penalties and interest. This figure was derived by comparing net income from KRA’s analysis against the company’s declared turnover, with the variance treated as undeclared income. Subsequently, in April 2025, KRA issued an agency notice to New Wide Garments (K) EPZ Ltd, instructing payment of the disputed amount held on behalf of Transfleet.

Transfleet, which owns warehouses at the Export Processing Zone in Athi River and operates in property investment, quarry aggregate sales, concrete excavation, and transport, contested the assessment. The company claimed it submitted an objection letter on June 6, 2023, and argued that KRA’s failure to respond within 60 days meant the objection was deemed approved under the Tax Procedures Act. It further challenged the assessment as excessive and based on erroneous banking analysis.

However, KRA denied ever receiving the objection letter and maintained that the tax demand was valid since Transfleet did not file a timely challenge. The Tribunal found no evidence that KRA received the objection, noting the letter lacked official receipt stamps, iTax acknowledgments, or courier records. An internal KRA email from June 5, 2023, confirmed no response had been received and requested resubmission, which Transfleet failed to prove.

The Tribunal emphasized that under Section 51(11) of the Tax Procedures Act, the 60-day period for KRA to respond only starts after receiving a valid objection. Since Transfleet could not establish receipt, the objection period never commenced, allowing the assessment to become final and payable.

While dismissing Transfleet’s appeal, the Tribunal clarified that the ruling did not validate KRA’s tax calculations but was based solely on the procedural failure to prove objection receipt. It also recognized the agency notice as an appealable decision, preserving the company’s right to pursue further legal remedies, including seeking an extension of time to object.