Pesapal’s tax case has been dragging on for months, and today, it was revealed that it had lost to the taxman. Undeterred, the payments company has appealed.
Payments firm Pesapal will appeal a Kenyan court ruling that the company owes KES 46,598,267 ($332,488) and KES 32,329,913 ($230,680) in taxes and penalties. Agosta Aliko and Barkley Odhiambo, Pesapal’s founder and legal and compliance manager, respectively, told TechCabal that the company will move to the high court to seek a new ruling.
“We refer to the ongoing tax dispute with Kenya Revenue Authority. The matter is at the Kenya high court. As such, we cannot comment further. Pesapal is committed to fulfilling its legal obligations and cooperating fully with Kenya Revenue Authority (KRA) throughout the process. We assure all our stakeholders that we will continue to operate in a professional manner while this dispute is being addressed,” says Agosta Aliko in a statement to TechCabal.
Based on the ruling, there is still an argument to be made for exemption from VAT. The payments company could argue that its provision of financial services falls within the scope outlined in the first schedule to the VAT Act, and, therefore, it should be exempt from VAT.
Pesapal may examine the specific distinctions between the services provided by the company and traditional financial institutions. Besides, the VAT Act clearly defines what constitutes financial services. It may choose to contend that the payment services offered by Pesapal align with the parameters established by the VAT law.
TechCabal understands that Pesapal’s business will not be affected by the ruling. “Pesapal has appealed the decision to the high court. There will be no implications on Pesapal’s business until the high court decides the substantive appeal,” says Pesapal.
Pesapal is clearly refraining from expressing an opinion on the case’s merits. It will be interesting to see the outcome of the high court’s determination in the coming weeks.
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