- Tribunal Ruling: The Kenya Tax Appeals Tribunal ruled on March 21, 2025, that staff costs incurred by a human resource outsourcing company are not reimbursements but rather incidental to its core services, thus forming part of the taxable value subject to VAT.
- VAT Registration Requirement: The Tribunal determined that the outsourcing company, Tazico Trading Company Ltd., had reached the VAT registration threshold of 5 million Kenyan Shillings and was required to register for VAT, as the staff costs were integral to the services provided.
- Guidance for Taxpayers: The decision clarifies the distinction between reimbursements and incidental costs for VAT purposes, prompting businesses with similar models to reassess their transaction structures and contractual obligations to ensure compliance with VAT regulations.
Source EY
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