This monthly update brings you a curated summary of recent tax decisions issued by the Tax Appeals Tribunal (Tribunal) and the appellate courts. In addition, we have also summarised the latest Kenya Revenue Authority (KRA) updates issued during the month.
The decisions addressed several critical tax issues in Kenya, including the following key themes:
- A taxpayer may apply to the Tribunal to clarify orders once issued (Devyani Food Industries (Kenya) Limited v Commissioner of Domestic Taxes);
- KRA should not depart from the transactional value method in customs valuation without a valid reason (Tolaram E.A Consumer Products Limited v Commissioner of Customs and Border Control);
- A taxpayer should ensure that they provide complete and definitive evidence of product composition during customs audits (Plantcare Chemical Industries Ltd v Commissioner of Customs and Border Control); and
- KRA has issued an internal directive discontinuing the general use of the ‘special table’ as a compliance enforcement tool, limiting its application to taxpayers engaged in missing trader schemes or tax fraud.
Summary of the decisions
- TAT E1204/2024: Devyani Food Industries (Kenya) Limited v Commissioner of Domestic Taxes
Devyani Food Industries (Kenya) Limited (Devyani) transferred the ‘Daima’ brand to Arctic International Private Limited, a Mauritius based related party. The KRA issued a Capital Gains Tax (CGT) assessment on 27 June 2024, amending the transfer value from USD 24 million (approximately KES 2.6 billion) to KES 20.4 billion and confirming a CGT liability of approximately KES 647 million. Devyani objected to the assessment and appealed to the Tribunal. The Tribunal set aside the Objection Decision on 14 November 2025, directing the KRA to reconsider and issue a fresh Objection Decision within 60 days. Devyani subsequently filed an application before the Tribunal seeking clarification of the scope and extent of the reconsideration directed to the KRA. Specifically, on which issues the KRA is required or permitted to reconsider, and which matters have already been conclusively determined by the Tribunal.
The KRA opposed Devyani’s application contending that the Tribunal lacked jurisdiction to entertain the present application having delivered its judgment on 14 November 2025. Devyani argued that the Tribunal had jurisdiction under Section 29(2) of the Tax Appeals Tribunal Act to clarify its orders, emphasising that the application sought procedural clarification and did not attempt to revisit the merits. Therefore, the issues for determination included the scope of KRA’s review during the 60-day period, the legal status of the underlying assessment and the 30-day period to appeal to the High Court.
The Tribunal held that it had jurisdiction to clarify its orders under Section 29(2) and 29(6) of the Tax Appeals Tribunal Act, as clarification does not constitute a review or reopening of the merits of its decision. Further, the Tribunal clarified three important points that taxpayers should note when faced with similar orders:
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- The Tribunal’s judgment is final, even where the KRA is directed to reconsider and issue a fresh Objection Decision;
- A taxpayer’s 30-day window to appeal to the High Court, under Section 32(1) of the Tax Appeals Tribunal Act, runs from the date of the Tribunal’s judgment and is not paused or extended by the KRA’s ongoing reconsideration process; and
- Once the Tribunal delivers its judgment, it has no authority to supervise or oversee how the KRA will implement the judgment.
What remains unclear from the Tribunal’s ruling is the precise scope of the Tribunal’s powers when directing the KRA to reconsider and issue a fresh Objection Decision, and whether this effectively affords the KRA a ‘second bite of the cherry’ to revisit issues already determined by the Tribunal.
In our view, where a taxpayer is dissatisfied with the Tribunal’s decision directing KRA to reconsider and issue a fresh Objection Decision, the appropriate course of action is to either lodge an appeal to the High Court within the prescribed timelines or seek a review before the Tribunal. Where a party is dissatisfied with the reissued Objection Decision, the aggrieved party may appeal against that decision to the Tax Appeals Tribunal. Failure to take either step may result in the Tribunal’s decision becoming final and binding.
- TAT E905/2025: Tolaram E.A Consumer Products Limited v Commissioner of Customs and Border Control
Tolaram E.A, a synthetic hair products manufacturer, imported Spin finish chemicals and classified them under HS Code 3809.91.00, with no customs duty. The KRA, following a post-clearance compliance review, reclassified the chemicals under HS Code 3403.91.00 which attracts 25% customs duty and demanded customs duties of approximately KES 34 million. KRA also determined the valuation of the consignment based on transactional values of identical products.
Tolaram argued that Spin finish chemicals are surface-active agents properly classified under HS Code 3809.91.00 as supported by the technical data sheets and that KRA erred both in reclassifying the product and in departing from the use of the transactional value without proper justification. The KRA maintained the reclassification of the product as a lubricant under HS Code 3403.91.00 was justified and argued that the departure to the transactional value for identical goods method was based on alleged discrepancies in Tolaram’s declared values.
The Tribunal found that the KRA failed to provide evidence to substantiate their reclassification of the product as a lubricant under HS Code 3403.91.00 to rebut the material evidence provided by Tolaram. On the valuation methodology, the Tribunal also determined that the KRA erred in departing from the transactional value method without sufficient justification. The appeal was allowed, and the KRA was directed to refund duties paid within 60 days.
- TAT E834/2025: Plantcare Chemical Industries Ltd v Commissioner of Customs and Border Control
Plantcare Chemical Industries, an agricultural inputs supplier, imported KARA Green fertilizer and classified it under HS Code 3105.90.00 (nitrogenous fertilizers) with no customs duty. The KRA reclassified the product under HS Code 3824.99.90 (chemical preparations) subject to 25% customs duty.
Plantcare argued that KARA Green is a nitrogenous fertilizer with 18% nitrogen content as its essential constituent, supported by laboratory analysis and product catalogue data. Therefore, Plantcare argued that the product should be classified under Chapter 31 (tariff code 3105.90.00) as the most specific description under the General Rules of Interpretation (GIR) which attracts no customs duty.
On the other hand, the KRA maintained that KARA Green is a plant nutritional formulation enriched with micronutrients and amino acids, properly classifiable under Chapter 38 (tariff code 3824.99.90) as a chemical preparation and which was subject to 25% customs duty.
The Tribunal analysed the chemical composition and applicable GIR rules. While acknowledging that nitrogen was a significant component, the Tribunal found that Plantcare failed to provide complete data on the remaining composition of the product (approximately 74.5% remained unaccounted for). This lack of complete evidence prevented the Tribunal from conclusively determining that nitrogen was the essential constituent. The Tribunal held that Plantcare did not discharge its evidentiary burden to prove the KRA’s classification was erroneous. The Tribunal dismissed the appeal and upheld the KRA’s Review Decision.
- TAT E812 of 2025: County Government of Kiambu v Commissioner of Legal and Board Services
The County Government of Kiambu (County Government) received additional tax assessments for the period 2019 to 2023 totalling approximately KES 559 million, comprising Pay As You Earn (PAYE), Withholding Tax, Withholding Value Added Tax, Withholding Tax on rental income, and Value Added Tax (VAT). The County Government objected and appealed to the Tribunal, contending that several of the assessments lacked proper basis and targeted non-taxable transactions.
The Tribunal set aside the VAT assessments on the basis that county revenue from fees is exempt under the VAT Act since these are public services and not business activities. The Tribunal also set aside PAYE assessments on imprest, airtime, and extraneous allowances, holding that these do not constitute taxable income when they function as facilitative tools rather than personal gains.
Lastly, the withholding tax assessments were quashed because the Commissioner failed to provide specific justifications or identify the exact transactions subject to tax as required by Section 51(10) of the Tax Procedures Act.
KRA notices
The KRA has issued a significant policy shift regarding the management of VAT compliance and enforcement. By way of an internal directive dated 10 March 2026, the KRA discontinued the ‘special table’ as a measure to ensure VAT compliance. The ‘special table’ was originally introduced to deter tax evaders and persons involved in tax fraud. However, it evolved into a general compliance enforcement mechanism, which the KRA acknowledges constituted an abuse of the tool and unjustly penalised genuine businesspeople and taxpayers. The only exceptions going forward are taxpayers engaging in missing trader schemes (either as beneficiaries or facilitators) or taxpayers involved in tax fraud. All taxpayers currently on the special table for reasons other than missing trader schemes or tax fraud are to be unconditionally removed effective 10 March 2026.
