Flower firm drags revenue agency to court over Sh1.3bn tax demand
What you need to know:
- Through lawyer Tom Ojienda, the company said the taxman insists on demanding “unsustainable and unreasonable taxes” even after the company had worked out the tax due and submitted its returns.
- Further, Prof Ojienda said the authority purported to adjust the flower firm’s sales for the years 2008-2010 to an average price of 0.10 Euros per stem.
A flower company in Naivasha is contesting a demand for payment of Sh1.3 billion tax by the revenue authority, saying the formula used threatens the industry.
Van Den Berg Kenya Ltd claims the Kenya Revenue Authority used an incorrect formula to arrive at the tax figure for 2008-2013.
Through lawyer Tom Ojienda, the company said the taxman insists on demanding “unsustainable and unreasonable taxes” even after the company had worked out the tax due and submitted its returns.
“KRA bases its claim on a general formula and not on actual sales. This threatens the flower industry,” said Prof Ojienda.
Van Den Berg Kenya grows roses in Kenya and sells them to a related company, Van Den Berg BV in the Netherlands.
KRA had demanded Sh2.1 billion but revised this to Sh1.3 billion after a few concessions.
Prof Ojienda also said the authority violated the transfer pricing rules, which require that once an objection is made, it is bound to respond within a specific timeframe.
He said the authority failed to respond within the legally specified timeframe and the objection was thus deemed to have been allowed. Further, Prof Ojienda said the authority purported to adjust the flower firm’s sales for the years 2008-2010 to an average price of 0.10 Euros per stem.
The company is seeking a declaration that the amount demanded and the formula used to arrive at the tax amount is unlawful. The hearing continues on May 18.
