Issue: The central dispute was whether Sendy Limited was liable to account for Value Added Tax (VAT) on services provided through its digital platform. The Commissioner of Domestic Taxes argued that Sendy acted as a principal in the transactions and should have charged VAT on the full value of services rendered by third-party transporters. Sendy contended it merely facilitated the transactions as an intermediary and only earned commission income, which it had correctly accounted for.
Decision: The High Court upheld the Tax Appeals Tribunal’s ruling in favor of Sendy Limited. It found that:
- Sendy operated as an agent, not a principal, in the logistics transactions.
- VAT was only applicable on the commission income earned by Sendy, not on the full transaction value.
- The Commissioner’s assessment was therefore incorrect and the appeal was dismissed.
Impact: This decision clarifies the VAT treatment of platform-based service providers in Kenya, affirming that intermediaries are only liable for VAT on their commission income—not the gross value of services facilitated.
Source Kenyalaw
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