Tax Appeals Tribunal Rules KRA May Treat Bank Deposits as Taxable Unless Proven Otherwise

Kenya’s Tax Appeals Tribunal has ruled that the Kenya Revenue Authority (KRA) may treat bank deposits as taxable income unless a taxpayer provides evidence to show that the funds are not subject to tax. The ruling arose from a KSh345.7 million tax dispute between KRA and Konchor Kid Ltd, covering the 2022 and 2023 tax years. The case focused on whether unexplained bank deposits could be assessed as taxable income by the tax authority. While affirming KRA’s authority to analyse and assess bank deposits as part of tax investigations, the Tribunal clarified that the burden of proof is not absolute. Once a taxpayer presents documented explanations showing that certain deposits are non-taxable, such as loans, capital injections, or third-party funds, the responsibility shifts back to KRA to evaluate and respond to that evidence. The decision underscores the importance of proper record-keeping and documentation by businesses and individuals, while also setting limits on how tax assessments based on bank deposits should be handled procedurally. Why This Matters Reinforces KRA’s powers to scrutinise bank deposits during tax audits Highlights the importance of documentation in defending tax positions Sets guidance on burden of proof between taxpayers and the tax authority Opportunity Sector Tax Advisory, Compliance, Financial Services, Corporate Governance Follow @MotoSeenAfrica for more updates on business, trade, investments, opportunities and economic growth across Africa. Moto Seen Africa — Africa’s View, Seen Clearly. #TaxCompliance #KRA #KenyaBusiness #CorporateGovernance #FinancialRegulation #TaxLaw