Tax Compliance Certificates Do Not Erase Tax Debt

Case Reference:Saphira & Company Limited v Commissioner of Domestic Taxes (Miscellaneous Application E005 of 2026) [2026] KETAT 39 (KLR) (19 March 2026) (Ruling)

The Background

Saphira & Company Limited was assessed for additional Income Tax of approximately Kshs. 899,328 for the 2019 tax year. The company objected, but the Commissioner of Domestic Taxes issued an Objection Decision on 31st August 2021 confirming the liability.

Instead of appealing within the statutory 30 days, the company waited over four years. It finally filed an application for leave to appeal out of time on 21st January 2026.

The Company’s Defence

Saphira argued that it genuinely believed the matter had been resolved. The company pointed to:

• Several meetings with the Kenya Revenue Authority (KRA) where the issue was discussed.
• The fact that KRA had issued Tax Compliance Certificates to the company over subsequent years.
• An error in the Objection Decision, which mistakenly referred to “Value Added Tax” instead of Income Tax.

The company also noted that it had filed a Notice of Intention to Appeal back in October 2022, though it never followed up with the required memorandum of appeal.

KRA’s Response

The Commissioner opposed the application, arguing:

• The delay of over four years was inordinate and unexplained.
• The company had failed to provide supporting documents for its late objection.
• The issuance of a Tax Compliance Certificate does not mean a taxpayer has no outstanding liabilities.
• The typographical error (VAT instead of Income Tax) did not invalidate the decision under Section 78(1)(c) of the Tax Procedures Act.

The Tribunal’s Decision

The Tribunal dismissed the application and upheld the Objection Decision. In doing so, the Tribunal made three key findings:

1. The delay was unreasonable and unexplained

The Tribunal noted that the company waited over four years before seeking leave to appeal. Filing a Notice of Intention to Appeal in October 2022 (over a year after the decision) without taking further action did not excuse the delay. The company failed to show that the delay was due to factors beyond its control or that it had exercised ordinary care and diligence.

2. A Tax Compliance Certificate does not wipe out tax debt

This was perhaps the most significant finding. The Tribunal examined Section 72 of the Tax Procedures Act and concluded:

“A TCC is issued upon the applicant fulfilling the conditions that the Commissioner may impose. The Act does not expressly state that the issuance of the TCC means taxes have been paid.”

The Tribunal added that it envisions circumstances where a TCC may be issued even with pending tax obligations. A taxpayer cannot assume that receiving a TCC means all disputes have been settled in their favour.

3. Meetings and informal discussions do not stop the clock

The company argued that it held meetings with KRA and believed the matter was resolved. The Tribunal was not persuaded, noting that there was no evidence of any formal communication from KRA withdrawing the Objection Decision. The tax liability remained due and payable unless and until the Commissioner formally communicated otherwise.

Key Takeaways for Taxpayers

• Strict timelines apply-You have 30 days to appeal an Objection Decision under Section 13 of the Tax Appeals Tribunal Act. Do not assume you can file late without a very strong reason.
• TCCs are not clean slates- A Tax Compliance Certificate only shows you met certain conditions for a specific period. It does not mean KRA has waived or settled all past disputes.
• Get it in writing- Meetings and phone calls do not count. If KRA agrees to withdraw or settle an assessment, demand a formal letter or revised decision
• .Mistakes in notices may not help you-A typo (like writing “VAT” instead of “Income Tax”) will not automatically invalidate a decision as long as the substance of the demand is clear
• .File or lose your right-Filing a Notice of Intention to Appeal is not enough. You must follow up with the memorandum of appeal and other required documents within 14 days.

Conclusion

The Tribunal’s ruling reinforces that tax disputes must be pursued with urgency and formality. Taxpayers who rely on informal discussions, assumed resolutions, or the issuance of TCCs as proof of compliance do so at their own risk.

If you receive an Objection Decision from KRA and disagree with it, the clock starts ticking immediately. Do not wait. Do not assume a meeting will fix things. File your appeal within 30 days – or risk losing your right to challenge the decision entirely.