Seven Seas Technologies will pay a lower Sh289.84 million in taxes instead of the Sh900.4 million claimed by the Kenya Revenue Authority (KRA) after the two parties reached an out-of-court agreement.
This means the tech firm will be spared from paying Sh610.56 million in taxes—which is the difference between the amount payable and the initial sum demanded by the taxman.
The KRA had been given the go-ahead to collect the Sh900.4 million after the tech firm lost an appeal at the Tax Appeals Tribunal in January.
But Seven Seas, led by lawyers Peter Opiyo and Samuel Njoroge successfully sought an out-of-court settlement with the taxman at the Alternative Dispute Resolution (ADR), cutting the tax demand by Sh610.56 million. The tech firm will now pay Sh289.84 million after the two parties reached the agreement last Friday, with the payment to be done in three instalments in June.
“The parties have reached a mutually agreeable position on the issues in dispute…. the taxpayer undertakes to pay the aforementioned outstanding principal tax of Sh289,847,448 in three monthly instalments,” read a ruling from the ADR dated April 12.
Seven Seas Technologies must pay the taxes by June 30, failure to which it will part with interest on the unpaid principal taxes. The KRA says the tech firm will be free to apply for amnesty on the penalty and accrued interest upon payment of the agreed amount by the end of June.
The taxman had slapped Seven Seas with tax demands on August 27 for the period between 2015 and 2019.
The Sh900.4 million comprised Sh620.27 million in principal and interest for value-added tax, Sh246.1 million in principal, interest, and penalty for pay-as-you-earn, and Sh34.05 million in principal, penalty, and interest on withholding tax.
Seven Seas objected to the KRA’s demand in September 2020 and went to the tax tribunal where it lost the appeal in January.
The tribunal gave the taxman the go-ahead to collect the Sh900.4 million, citing Seven Seas’ failure to provide additional documentation challenging KRA’s tax demand.
The firm challenged the tribunal’s ruling at the High Court in February and then applied to resolve the case through the ADR.
The KRA’s agreement with Seven Seas marks the latest case where the taxman has sought out-of-court resolution of cases to enhance the collection of taxes.
The taxman netted Sh4.37 billion through ADR in the first quarter of the current financial year, even as the KRA holds that some Sh300 billion is locked up in court battles with taxpayers.
