by Thinus Ferreira
MultiChoice Kenya has lost a case at Kenya's Tax Appeals Tribunal to pay less value-added tax (VAT) after the Kenya Revenue Authority (KRA) slapped the pay-TV operator's business in the East African country with KSh 681 million (R94.2 million) in additional tax, penalties and interest.
MultiChoice Kenya claimed lower VAT in the period between January 2021 and June 2023, and argued that it was properly registered under Kenyan business tax laws and entitled to pay a lower VAT amount after deducting what is called "input tax".
MultiChoice said that it was MultiChoice Kenya, not MultiChoice Africa, that is operating as its local tax agent.
MultiChoice argued that MultiChoice Kenya could therefore deduct input tax in the country - the VAT a business pays on goods or service to produce those - from the VAT it collects and pays on sales.
MultiChoice however had a foreign-entity PIN for tax purposes and couldn't get this foreign-entity PIN to be accepted on Kenya's Tax Invoice Management System (TIMS).
According to the KRA, it was MultiChoice Africa and not MultiChoice Kenya operating the DStv and GOtv pay-TV services, as well as the Showmax video streaming service, in Kenya.
The KRA said MultiChoice is doing business-to-consumer (B2C) transactions - consumer business that falls under Kenya's taxable digital marketplace supplier VAT laws.
The KRA argued that MultiChoice Kenya isn't eligible for VAT tax deductions since it is MultiChoice Africa operating in the country, and that as a business operating B2C transactions, it doesn't qualify for a lower VAT tax rate as a non-resident supplier or company.
Kenya's Tax Appeals Tribunal sided with the KRA, ruling that "the finding by the Tribunal is that the respondent (KRA) was justified in issuing an assessment and disallowing the input tax claimed by the appellant".