NAIROBI, Kenya – German engineering and technology company Siemens has sued the Kenya Revenue Authority (KRA), seeking to compel the taxman to pay a Sh467.2 million tax refund that the company says has remained outstanding since 2022.
Siemens filed a judicial review application at the High Court in Nairobi, challenging KRA’s handling of its refund claim and arguing that the authority failed to act within the statutory period provided under Kenya’s tax laws.
Court documents show that Siemens submitted its refund application on October 31, 2022, and KRA received it on November 1, 2022.
The company argues that KRA was required to communicate its decision within 90 days but failed to do so. Siemens is now asking the High Court to declare KRA’s failure to determine the application within the prescribed period unlawful, unreasonable and procedurally unfair.
The dispute centres on Section 47 of the Tax Procedures Act, which governs refunds of overpaid tax.
The law provides that when a taxpayer applies for a refund, the Commissioner may audit the claim to establish its validity. It then requires the Commissioner to notify the applicant of the decision within 90 days of receiving the application.
KRA’s own guidance similarly states that a refund decision should be communicated within 90 days. The authority says that where a claim is fully supported, it is expected to be processed within that period.
Siemens argues that the deadline in its case expired in January 2023 without KRA determining the application. The company says the refund therefore became ascertained and approved under Section 47(3) with effect from January 30, 2023.
Siemens wants the court to compel KRA to process and pay Sh467,225,012. The company is also seeking interest of one per cent per month on the principal amount from December 1, 2024, until the refund is paid in full.
It has further asked the court to award it the costs of the case.
Section 47 does not only establish the 90-day period for communicating a decision. It also provides that where the Commissioner is satisfied that a taxpayer has overpaid tax, the amount should first be applied against any other tax owed by that taxpayer before any remaining balance is refunded.
The law further provides that an approved overpayment should be repaid within two years from the date of application. If the amount remains unpaid after that period, it attracts interest of one per cent per month or part of a month.
KRA’s public guidance reflects the same position, stating that supported refund claims are expected to be paid within two years and that unpaid amounts after that period attract one per cent monthly interest.
Siemens is therefore challenging both the alleged failure to determine its claim within the initial 90-day period and the continued retention of the money. The company argues that KRA’s continued retention of the funds violates constitutional protections relating to taxation and property.
The case comes against the backdrop of a separate tax dispute between Siemens and KRA, although the two matters concern different claims.
In September 2024, the Tax Appeals Tribunal cleared KRA to collect Sh586.3 million from Siemens AG following a dispute linked to the construction of the Ethiopia-Kenya electricity transmission line converter station at Suswa.
The project involved Siemens AG and Spanish company Isolux Ingeniera, which had entered into a contract with the Kenya Electricity Transmission Company (KETRACO) for construction of the Suswa converter station.
