Pesapal Wins Landmark VAT Exemption Case
Court has overturned a tax tribunal decision against payments firm Pesapal, ruling that commissions the company earns are exempt from VAT..
✨ Key Highlights
The High Court has ruled in favor of Pesapal Limited, overturning a tax tribunal decision and exempting the payment firm's commissions from Value-Added Tax (VAT). This landmark judgment means Pesapal will not have to pay KSh 76.8 million in unpaid VAT and KSh 33.9 million in penalties and interest assessed by the Kenya Revenue Authority (KRA).
- High Court Judge Rhoda Rutto ruled that Pesapal's activities align with VAT-exempt financial services, even when delivered digitally.
- The Kenya Revenue Authority (KRA) had argued that Pesapal was a technology platform, not a financial service provider.
- The ruling affirms that digital payment processors can qualify for VAT exemption, signifying that any future expansion of VAT in this sector would require new legislation.
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Kenyan Institutions Face Scrutiny and Rulings Over Billions in Disputed Funds - September 2025
Controller of Budget Margaret Nyakang’o has criticized Kenya’s National Treasury for the unauthorized spending of Sh77.48 billion outside the budget law, citing a misuse of Article 223 of the Constitution. In a separate matter, the Metropolitan National Sacco Society has approved a forensic audit after a Sh15 billion loan book asset was revealed to be untraceable. This decision was made during the Sacco's 47th Annual General Meeting to address concerns about its financial stability and a negative equity position. Meanwhile, the High Court has ruled in favor of Pesapal Limited in a tax case, exempting the firm's commissions from Value-Added Tax (VAT). This judgment overturns a tax tribunal decision and will save Pesapal from paying the Kenya Revenue Authority (KRA) KSh 76.8 million in unpaid VAT and KSh 33.9 million in penalties and interest.
