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Equity Bank Kenya to pay KRA Kshs. 234M in tax claims – KBC

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The Kenya Revenue Authority (KRA) has won Kshs. A 234 million tax claim against Equity Kenya Ltd after the High Court in Nairobi upheld an earlier decision by the Tax Appeal Court to allow KRA to levy Bank Pay As You Occupy the Employee Share Ownership Scheme (ESOP).

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Equity Bank had filed an Appeal against the Court’s decision of 19 December 2019 to uphold KRA’s motion.

KRA conducted a tax compliance audit of the Bank’s records in respect of Corporate Taxes for the 2015 revenue year, Taxes for the period August 2013 to December 2015 and PAYE levies for the 2016 revenue year.

The authority issued an assessment on 21 June 2017 for Kshs.1,738,969,276 including penalties and interest totaling Kshs. 346,147,520 due to Corporate Taxes, Kshs. 234,138,308 to PAYE account and Kshs.1,158,683,449 due to tax.

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KRA claimed that the Bank is working with ESOP where employees are given the opportunity to acquire shares of the bank at a reduced price.

Eligible employees are invited to make an offer when they are opened and that the allocated and acquired shares are held for a period of five years after which those are given to eligible employees.

According to the Income Tax Act, if an employee chooses to use that option, the benefit payable is given the same as any other employment benefit as access to that benefit is provided only as a result of one’s employment so it can only be classified as employment benefit and then given PAYE.

The Supreme Court, in upholding the decision of the Court agreed with KRA’s view that ESOP provides benefits to the employee and benefits to the employee stem from the fact that the value of the shares, whether issued or not. usually appreciate when giving.

Value value is a benefit to a taxed employee.

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