Tax tribunal orders KRA to redo KUSCCO’s KSh973m tax bill using rebuilt accounts

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The Tax Appeals Tribunal has set aside a KSh972.95 million tax assessment against the Kenya Union of Savings and Credit Cooperatives (KUSCCO), ruling that the Kenya Revenue Authority (KRA) based it on financial statements the union had already told it were unreliable.

In a judgment delivered on October 9 in Tax Appeal E382 of 2025, the tribunal sent the matter back to KRA and ordered a fresh objection decision based on KUSCCO’s reconstructed accounts. The judgment has now been published on Kenya Law.

A bill covering four years

KRA reviewed the umbrella body’s tax affairs for 2019 to 2022 and shared preliminary findings by email on October 9, 2024. On November 29, 2024, it issued an assessment of KSh972,953,059 covering value added tax, withholding tax, PAYE and corporation tax. KUSCCO objected on December 24, and KRA confirmed the full amount on February 18, 2025.

The union told the tribunal that a forensic audit had found significant discrepancies in its audited financial statements for 2018 to 2022, which it attributed to impropriety by previous management. It said it was rebuilding its books to give a true picture, and that on November 25, 2024, it had asked KRA for more time. KRA issued the assessment four days later instead.

Kitengela homes and marketing costs

The judgment lists the main items in dispute. KRA charged withholding tax on the whole KSh1.44 billion balance of KUSCCO’s Kitengela housing project. The union said it had paid the tax on KSh984.48 million of certified contractor work, and that much of the rest was building materials, which do not attract the tax.

KRA also charged withholding tax on marketing and advertising spending. It accepted that such payments to Kenyan residents only became taxable from July 1, 2023, under the Finance Act, 2023, but said KUSCCO had not provided a breakdown for the earlier period. Other items included KSh52.5 million in home sales in 2022 that KRA said had not been declared, VAT on training sessions the union said were held in Rwanda, Ireland, Dubai and Israel, and PAYE on allowances paid to directors and delegates.

KRA’s position throughout was that KUSCCO had not provided the restated statements or supporting schedules. Its written submissions, however, were filed on August 19, after the August 11 deadline set by the tribunal, and were not considered.

“Casting doubt” on the assessment

The panel, chaired by Robert Mutuma, found that KUSCCO had kept records and handed them over, but that the dispute had turned to whether those records could be trusted. It noted that the union had informed KRA of the problems in good time.

“This realisation was made known to the Respondent informing it of the unreliability of the impugned financial statements in determining the Appellant’s accurate tax liability, nevertheless it proceeded to issue additional tax assessments based on them thereby casting doubt on the accuracy of the assessments so arrived at,” the judgment says.

“The Tribunal is persuaded that injustice would be occasioned to the Appellant should the confirmation of the assessments be allowed to stand where the Appellant has demonstrated that the assessments and their confirmation was premised on misstated facts,” it added.

The tribunal had earlier refused, in January 2026, to admit the restated accounts as evidence because they were unsigned. Under its orders, KUSCCO must now give KRA signed audited financial statements within 14 days of the judgment, and KRA must issue a new objection decision within 60 days of receiving them. Each party will bear its own costs.

The ruling does not settle how much tax KUSCCO owes. That will depend on the fresh decision. The union’s troubles have also reached its member Saccos, as Ukaguzi Sacco’s recent disclosures on its KUSCCO exposure show.