- The Tax Appeals Tribunal (TAT) ruled that the sale of repossessed collateral, specifically auctioned vehicles, is subject to Value Added Tax (VAT), as the VAT Act does not provide an exemption for such sales.
- The case involved a bank (X Ltd) challenging the Kenya Revenue Authority’s (KRA) VAT assessment related to auction sales of repossessed motor vehicles, with the TAT determining that the auction sale constitutes a taxable supply separate from the provision of credit facilities.
- This ruling has significant implications for financial institutions involved in loan facilities, emphasizing the need to account for VAT on repossessed asset sales, which could affect their financial operations and compliance strategies.
Source EY
