Pesapal Wins Court Ruling: Digital Payment Services Exempt from VAT in Kenya

• The High Court ruled in favor of Pesapal, exempting its transaction commissions from VAT.
• Pesapal contested a KRA assessment demanding KSh 76.8 million in unpaid VAT and KSh 33.9 million in penalties.
• The company argued its activities fall under VAT-exempt financial services, even on digital platforms.
• Justice Rhoda Rutto emphasized that VAT exemptions are based on activity nature, not institutional classification.
• KRA claimed Pesapal is a tech platform, not a financial service provider under banking law.
• The court sided with Pesapal, affirming digital payment processors can qualify for VAT exemption.
• The ruling prevents additional tax burdens on merchants and consumers and limits KRA’s classification scope.

Source: kenyanwallstreet.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---