Pesapal, the payments company, is appealing a recent court ruling in Kenya that ordered them to pay huge sums in taxes and penalties. The amount includes KES 46,598,267 (N229 million) and KES 32,329,913 (N159 million) respectively.
The founder of Pesapal Agosta Aliko, along with Barkley Odhiambo, the company’s legal and compliance manager, spoke to TechCabal. They told them that they will seek a new ruling from the high court.
In a statement to the media, Agosta Aliko said,
“We are currently involved in a tax dispute with the Kenya Revenue Authority, which is now being addressed at the Kenya high court.”
With the current details given, much information cannot be provided in such a regard.
Pesapal is however committed to fulfilling its legal obligations and cooperating fully with the Kenya Revenue Authority throughout this process.
“We assure all our stakeholders that we will maintain a professional approach while dealing with this dispute. Despite the recent ruling, there is still a potential argument for Pesapal to claim exemption from Value Added Tax (VAT).”
The company could assert that its provision of financial services falls within the scope defined in the first schedule of the VAT Act. This thereby qualifies for VAT exemption.
Analyzing the Case
In analyzing the case, Pesapal might explore the specific distinctions between its services and those offered by traditional financial institutions.
Moreover, the VAT Act provides clear definitions of financial services, which Pesapal could argue aligns with the parameters set by the VAT law.
It has been revealed that the ruling will not have an immediate impact on Pesapal’s business operations. Pesapal has appealed with the high court.
Until the substantive appeal is decided, there will be no implications for Pesapal’s business.
Pesapal is currently refraining from expressing a viewpoint on the merits of the case, leaving it to the high court to determine the outcome in the coming weeks. Hence the appeal.
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