Airtel Networks Kenya Limited has dodged an Sh11.3 million tax demand by the Kenya Revenue Authority (KRA) in a feud over the customs valuation of a consignment of network equipment imported from South Africa.
The Tax Appeal Tribunal said that KRA failed to give a timely response to an application by Airtel challenging its demand for payment of an extra Sh11.3million in taxes for the imports contrary to requirements of the East African Community Customs Management Act, 2004 (EACCMA).
“The Respondent (KRA) did not issue a review decision to the application made by the appellant (Airtel) on May 9, 2022, and therefore the Appellant’s application for review was allowed by the operation of the law,” the Tribunal said in a February 21, 2025, decision.
Section 229(4) of the EACCMA requires that objections to tax demands be reviewed within 30 days.
The case stems from when Airtel imported network equipment from a South African company, in April 2022. Upon clearance, Airtel declared the transaction value of the equipment as Sh32.4 million and paid import duty amounting to Sh10.1 million.
However, after a physical verification, KRA’s customs officials challenged the declared value, arguing that it was lower than expected. KRA’s valuation team subsequently increased the customs value, imposing an additional tax liability of Sh11.3 million.
Airtel disputed this adjustment saying that it had applied the correct customs valuation method by declaring the transaction price, as prescribed under the EACCMA. The telecom company argued that the increased tax assessment was arbitrary and lacked legal justification.
In May 2022, Airtel formally requested a review of KRA’s decision, as allowed under EACCMA. According to the law, KRA was required to respond within 30 days. However, the Tribunal found that KRA failed to issue a written response within the statutory timeline.
While relying on previously decided court rulings, Airtel argued that the failure to respond within 30 days meant its application was automatically deemed successful. The company repeatedly provided supporting documents including invoices, purchase agreements, and proof of payment to justify its declared customs value, but KRA insisted that the documents were insufficient.
KRA, in its defence, maintained that its decision to uplift the customs value was justified, claiming Airtel’s documentation did not meet verification standards. The taxman further argued that Airtel’s attempt to submit additional documents after the 30-day review period was improper.
The tribunal, however, ruled that KRA’s failure to issue a timely review decision effectively meant Airtel’s application had been allowed by operation of law.
“The tribunal also notes that where the respondent fails to issue its review decision within the mandatory 30 days, the application for review is deemed to have been allowed by operation of the law pursuant to Section 229 (5) of EACCMA,” it said.
