- VAT on auction sales for debt recovery is now mandatory in Kenya
- Kenya’s Tax Appeals Tribunal ruled that auction sales for debt recovery are subject to VAT
- Dispute between Kenya Commercial Bank (KCB) and Kenya Revenue Authority (KRA) led to this ruling
- KCB argued that auctioned sales were not profit-driven but aimed at recouping defaulted loans
- KRA argued that since KCB sold vehicles to third parties, they were taxable supplies under the VAT Act
- Tribunal concluded that disposal of seized goods through auction is not part of providing credit facilities
- Ruling clarifies that lenders must pay VAT during debt recovery processes
- Financial institutions may face increased tax obligations during loan recovery
- Lenders should reassess tax compliance frameworks for asset disposals and anticipate adjustments in financial recovery procedures
Source: africataxreview.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
