Update: High Court Ruling On VAT On Commercial Property

Introduction

On 29 November 2018, High Court Judge Lady Justice Mary Kasango delivered a judgment in the case of David Mwangi Ndegwa (Mr. Ndegwa) v. the Kenya Revenue Authority (Civil Suit No. 541 of 2015) (the KRA). In brief, Mr. Ndegwa had brought an action against the KRA seeking a declaration that Value Added Tax (VAT) is not payable on a transaction for the sale or purchase of land, regardless of whether or not the buildings standing on it are residential or commercial. Mr. Ndegwa had also sought a VAT refund of KES 11,200,000 that he had paid for the purchase of a commercial property. The key question for determination was whether a transfer of commercial premises is a taxable or exempt supply under the provisions of Part II, paragraph 8 of the First Schedule to the VAT Act. Click here to read our legal alert for a detailed analysis of the case.