By Sam Alfan.
Oki General Trading Limited has moved to the Tax Appeals Tribunal, challenging the Kenya Revenue Authority’s (KRA) decision to disallow imports worth Sh349,287,179, claiming customs duty was not paid.
The procurement and logistics solutions company is also contesting KRA’s move to subject director and staff withdrawals amounting to Sh604,653,420 to Pay As You Earn (PAYE) taxation.
The Ruaraka-based firm wants the Tribunal to overturn the decision by the Commissioner of Domestic Taxes, which it claims erroneously categorized these withdrawals as income subject to PAYE.
According to Oki General Trading, KRA misapplied both fact and law in assessing Corporate Income Tax (CIT) amounting to Sh162,912,591 on alleged stock reconciliation variances—despite the company asserting that no such variances existed.
Additionally, the company has faulted the Commissioner for disallowing import-related costs and VAT-exempt purchases, leading to a further CIT assessment of Sh53,446,914.
“The Commissioner of Domestic Taxes erred in law and fact by assessing PAYE amounting to Sh5,726,184 on staff salaries for the period October 2020 to September 2025,” the company states in documents filed with the Tribunal.
Oki General Trading further claims that KRA wrongly assessed PAYE of Sh11,249,158 on staff reimbursements, treating them as taxable benefits. It also disputes the classification of certain payments as commissions subject to PAYE of Sh972,360, arguing they were for goods and services—not employment-related commissions.
The company strongly objects to KRA’s move to subject payments made to Satnam Limited to PAYE, insisting the funds were unauthorized and had been misappropriated by a former director, Honey Katwani, who is currently facing criminal charges for allegedly stealing Sh356 million.
The High Court has already ruled on the matter, ordering Katwani, his wife, Jayesh Soni, and Poonam Mangtani to repay the misappropriated funds.
The judgment entered by the court amounts to USD 2,786,806.05 (approximately Sh362,284,786.50) against Galaxy Middle East & Africa T/A Smart Pro, Honey Katwani, Jayesh Soni, and Poonam Mangtani, jointly and severally.
Following this, Oki General Trading filed an application before the High Court’s Commercial Division, seeking a judgment against the company and directors for the same amount. The company also requested a permanent closure of warehouses in Nairobi and Mombasa operated by Galaxy Middle East & Asia Limited and a return of the goods stored therein.
Before the Tribunal, Oki General Trading is also challenging CIT amounting to Sh10,859,159 assessed on alleged undeclared sales linked to Satnam Limited.
The company claims that KRA wrongly disallowed capital allowances due to the absence of an asset register and proof of ownership, resulting in a further CIT assessment of Sh2,171,491.
“The Commissioner of Domestic Taxes erred in law and fact by assessing VAT amounting to Sh5,791,551 on alleged understated sales linked to Satnam Limited, despite Oki’s denial of any affiliation,” the company states.
Furthermore, the firm is contesting VAT amounting to Sh86,886,715 assessed on stock reconciliation variances, maintaining that the figures align with audited financial statements in accordance with Section 13(2) of the Tax Appeals Tribunal Act.
The firm explained that KRA conducted an audit of its operations for the period 1st October 2020 to 31st December 2024, and subsequently issued an assessment letter dated 10th April 2025.
In the letter, KRA demanded additional taxes, including Corporate Income Tax (CIT), Value Added Tax (VAT), Withholding Tax (WHT), and PAYE, totaling Sh810,924,663, inclusive of penalties and interest.
“Being dissatisfied with KRA’s demand and keen to safeguard its legal rights, the company lodged a Notice of Objection on 10th May 2025, pursuant to Section 51 of the Tax Procedures Act (TPA),” Oki states.
However, KRA went ahead and issued its Objection Decision on 17th July 2025, confirming the assessment, now revised to Sh827 million.
KRA reviewed the Ecobank and Absa Bank statements for the referenced
periods and asserted that total withdrawals amounting to Sh.604,653,420 made by charged Khatwani,Anil Kumar Ramchandani, Jatin Aswani and Jayesh Soni ought to be subjected to Pay As You Earn (PAYE) tax.
The company claims that Taxman’s position is premised on the
assumption that these withdrawals constituted emoluments paid in the course of employment.
But the company asserts that the amounts withdrawn by the aforementioned individuals do not constitute salaries, wages, bonuses, or any form of remuneration for services rendered.
Rather, the withdrawals were petty cash disbursements used exclusively for
business-related expenses, including procurement of office supplies, payment for
catered meals for employees, and reimbursements for operational costs incurred on behalf of the company.
The company claims these transactions were not made in furtherance of an employer-employee
relationship, but in the ordinary course of business administration.
According to the company Section 3(2)(a)(ii) of the Income Tax Act (Cap 470) provides that income tax shall be charged on income in respect of gains or profits from employment or services rendered.
The company claim that KRA has not adduced any evidence to demonstrate that the withdrawals constituted remuneration for services rendered under a contract of employment.
” The individuals in question are directors and non-salary employees. The funds withdrawn were utilised for business operations and not for personal gain,” claim the company.
Oki General Trading ltd therefore submits that the PAYE assessment of Sh 216,385,508 issued
by KRA is without merit and should be set aside in its entirety.
“The withdrawals in question do not fall within the scope of taxable emoluments under the Income Tax Act and PAYE Rules, and no employer-employee relationship has been
established to warrant such an assessment,” says the company.
