BY SAM ALFAN.
Attempts by Kenya Revenue Authority to impose value added tax on entrance and subscription fees at golf and sports clubs have been rejected by the High Court.
High Court Judge Nixon Sifuna upheld a decision of the Tax Appeals Tribunal blocking KRA from collecting 16 percent Value Added Tax (VAT) on annual subscription and entrance fees on golf and sports clubs.
“The consolidated judgement that the Tax Appeals Tribunal delivered on 27th March 2020 in the said appeals is hereby upheld, with the consequence that the joining fee (entrance fee) and members subscription fee of Golf clubs are exempt from Value Added Tax (VAT), “ruled Justice Sifuna.
KRA sought to overturn the decision of the tribunal blocking the taxman from demanding the fees.
Four clubs, Sigona Golf Club, Thika Golf Club, Kiambu Golf club, Ruiru Golf club and the Kenya Golf Federation successfully quashed the demand for fees by KRA.
The authority had demanded about KSh 40 million in taxes from the four clubs, for the years 2015 and 2016.
The taxman had argued that due to the exclusivity of the clubs’ membership, there was rational basis to charge taxes on the subscription fees.
According to the taxman, the clubs were purely in business and not philanthropic entities as they had counter-argued.
Justice Sifuna dismissed KRA’s appeal stating that the taxman was that targeting every source of a business’ income in a case of ‘sheer caprice’ and ‘whim’ – a detriment to the operations of any business.
