[2024] KETAT 1024 (KLR)

Frontier Enterprises Limited v Commissioner of Legal Services and Board Co-ordination (Tax Appeal E385 of 2023) [2024] KETAT 1024 (KLR) (28 June 2024) (Judgment)

Neutral citation: [2024] KETAT 1024 (KLR)

Republic of Kenya

In the Tax Appeal Tribunal

Tax Appeal E385 of 2023

E.N Wafula, Chair, Cynthia B. Mayaka, RO Oluoch, T Vikiru & AK Kiprotich, Members

June 28, 2024

Between

Frontier Enterprises Limited

Appellant

and

Commissioner of Legal Services and Board Co-ordination

Respondent

Judgment

Background 1. The Appellant is a holding company that was incorporated in Mauritius in 2017 as a private limited company in Mauritius with subsidiaries across Africa including Uganda, Kenya, Rwanda and Zambia.

2. The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, and the Kenya Revenue Authority is an agency of the Government of Kenya established for the purposes of receipt, collection, accounting of Government revenue, and enforcement of all the relevant tax laws.

3. The dispute herein arose when the Respondent conducted tax investigations on the Appellant and issued a tax assessment on 23rd March 2023 for the period 2018 to 2021 for Corporation tax, Withholding tax (WHT) and PAYE in the sum of Kshs 440,381,166.

4. The Appellant objected to the assessment on 9th May 2023 and the Respondent confirmed the assessment on 16th June 2023.

5. The Appellant being dissatisfied with the Respondent’s objection decision lodged with the Tribunal a Notice of Appeal dated 14th July, 2023.

The Appeal 6. The Appellant has premised its Appeal on its Memorandum of Appeal dated 28th July 2023 and filed on 1st August 2023.

7. Its grounds of Appeal were as follows:a.That the Respondent erred in fact and law in concluding that the Appellant is a tax resident in Kenya.b.That the Respondent erred in law and fact by demanding corporate income tax from a non-resident entity.c.That the Respondent erred in law and fact by disallowing business expenses contrary to Section 15 of the Income Tax Act.d.That the Respondent erred in law and fact by demanding withholding tax on expenses, not within the ambit of Section 35 of the Income Tax Act.e.That the Respondent erred in fact and law by deeming interest on capital.f.That the Respondent erred in demanding withholding tax on expenses against Sections 3 and 35 of the Income Tax Act.g.That the Respondent erred by charging PAYE on the salaries of foreign employees.

Appellant’s Case 8. The Appellant’s case was supported by its Statement of Facts filed on 1st August 2023 and dated 28th July 2023 and written submissions dated 11th April 2024.

9. The Appellant argued its Appeal under the following broad headlines.

On Tax Residency 10. The Appellant cited Section 2 of the Income-tax Act (ITA) which provides as follows: -“’resident’, when applied in relation: -b.to a body of persons, means-i.that the body is a company incorporated under a law of Kenya; orii.that the management and control of the affairs of the body was exercised in Kenya in a particular year of income under consideration; oriiithat the body has been declared by the Minister, by notice in Gazette, to be resident in Kenya for any year of income”

11. It was its view that based on the conditions laid in Section 2 of the ITA, the following tests were required for the determination of residency:a.Test 1 - that the body was to be a company incorporated under a law of Kenya. Its position was that it was a company incorporated in the Companies Act 2001, of Mauritius and not Kenya the Kenyan Companies Act and therefore this test failed.b.Test 2 - that the management and control of the affairs of the body was to be exercised in Kenya in a particular year of income under consideration. Its position on this test was that during the period under audit, its management was based in their respective countries of residence and not Kenya. That in addition, even where the said management was based in Kenya, the conditions within the period under review were unprecedented times during the COVID-19 pandemic when there was a limitation on travel. It relied on the case of Emergency Plus Medical Services Limited v Mandera County Government [2021] eKLR, Civil Case 4 of 2020, where it averred that the court had stated as follows: -“The year 2020 and indeed till now work was slowed down by the coronavirus pandemic. Many companies and Institutions were engulfed with uncertainty, business came to a standstill and some almost shut down. This uncertainty was experienced in the entire world. In other words, the entire world came to a standstill. Legal processes were not spared either. The court finds the delay in the circumstances of the Covid situation well explained and excusable.”c.Test 3- that the body has been declared by the Minister, by notice in the Gazette, to be resident in Kenya. That this had not been done for the period under audit.

12. The Appellant argued that having failed the 3 legal tests above, it followed that it was not a resident of Kenya for the period under review.

13. The Appellant referred to Section 3 of the ITA and the case of Motaku Shipping Agencies Limited V Commissioner of Income Tax Civil Suit No. 60 of 2013 (Income tax Appeal) to assert that its income was accrued and derived in Mauritius and was thus not taxable in Kenya.

14. That being a Mauritius entity, all its income was derived in Mauritius, not Kenya and that its income was subjected to tax in Mauritius. That taxing the same income in Kenya would amount to double taxation. It relied on the cases of Waweru & 3 others (suing as officials of Kitengela Bar Owners Association) & another v National assembly & 2 others Institute of Certified Public Accountants of Kenya (ICPAK) & 2 others (Interested Parties) (Constitutional Petition E005 & E001 Consolidated) of 2021) [2021] KEHC9748 (KLR) to support this argument.

On board composition 15. The Appellant averred that it does not have any resources dedicated to the company because it is an investment holding company which makes strategic investment decisions through a board.

16. That the following were its board members and their nationalities:Name of Director Nationality Address

1. Bernadette Marlene Fulton Australian MareRonde,Pereybere,Mauritius

2. Chung Tse Sung Chung Tan Wing Mauritian 14 Pere Laval Street, RoseHill, Mauritius

3. Abdoolakhan Shammeemkhan Mauritian Lot 30 & 33 Chapmanview,Coromadel74EtiennePellereau Street. Port LoiusMauritius

4. Ashvin Duljeet Mauritian Suite 4204th Floor Barkly WharfLe Caudan Waterfront.Port LouisRepublic of Mauritius

5, Victor William Chandler British Penthouse 4, 2D CormorantWharf Queensway QuayGibraltar GX11 1AA

6. Simon Thomas John Raggett British 27WoodclyfeDriveChileshurtKent BR7 5NTUnited Kingdom

7. Michael Gary Carlton British 23 Ragged Staff WharfQueensway QuayGibraltar

8. Andrian John Reginald Collins British 21KensingtonPlace,LondonW8 7PTUnited Kingdom

9. Udayesing Bheergoonath Mauritian Suite 4204th Floor barkly WharfLe Caudan WaterfrontPort LoiusRepublic of Mauritius

10. Oliver Edward Bates British 11 Rostrevor RoadLondonUnited Kingdom

17. The Appellant stated that 100% of its board of directors are not Kenyans or residents of Kenya and therefore a conclusion cannot be reached that the management and control of the company is exercised in Kenya. That it was thus not true that its directors Udayesing Bheergoonath and Ashvin Duljeet are involved in the management and decision-making of the company.

18. That based on the above analysis, it was its view that it was not a tax resident because it was not managed and controlled from Kenya.

19. The Appellant distinguished the case of De Beers Consolidated Mines Limited v Howe (Surveyor of taxes) 5TC 198, which was relied on by the Respondent to argue that the Appellant was a tax resident in Kenya as follows:a.The Debeers case had two tiers of directors while it only had one tier of directorship.b.The Chairman of the board had a casting vote in Debeers case, unlike this one where all votes are equal.c.In De Beers' case, most directors were residents of the UK, and in this one none was a resident of Kenya.d.In Debeers case matters of policy on crucial matters were left to the UK and in this one, all matters are determined in Mauritius.e.In De Beers case majority of directors exercised control in the UK and in this case, no director exercised control in Kenya.

20. That based on the above analysis, it was its view that its board is an independent board capable of making decisions in its capacity and cannot be regarded as being managed and controlled from Kenya and yet the directors are neither Kenyans nor residents in Kenya.

On Corporate Income Tax 21. The Appellant stated that the assessment of Corporate income tax of Kshs 238,383,341. 00 was done in error for the following reasons;a.The Respondent erroneously used consolidated figures of the group instead of the company position;b.The Respondent erroneously disallowed bad debt expenses that met the legal threshold in Kenya and Mauritius;c.The Respondent erroneously assessed profit on disposal of asset;d.The Respondent erroneously concluded that the expenses were not paid by the Appellant; ande.The Respondent derived the assessment workings from the combined trial balance and financial statement of the group and not the Appellant.

22. That based on the above reasons, it was its view that the Respondent had erroneously used the consolidated group position to calculate its tax liability instead of using the company position.

23. That the Respondent used a wrong tax which resulted in the overstatement of the tax liability by including workings from other subsidiaries.

24. That the workings of the Respondent were flawed, erroneous, malicious and contrary to the provisions of the Constitution and the Fair Administration Action Act.

On bad debt expense disallowed 25. The Appellant stated that the Respondent erroneously disallowed expenses relating to a bad debt in the year 2019 of USD 3,463,937 but both subsidiaries were closed due to non-viability of business in 2019 and the amounts owed were deemed non-collectable.

26. That the conditions for writing off bad debts were governed by Sections 21 and 60 of the Income Tax Act, 1995, of Mauritius. That Section 60 of the ITA of Mauritius provides as follows:-“(1)Subject to subsection (3), a company which derives gross income specified in section 10(1)(b) in an income year may deduct-a.The amount of a debt or sum which is proved to have become bad and to have been written off as a bad debt by the company in that income year; and

27. Subject to subsection (3), a company which derives gross income, other than gross income specified in section 10(1)(b), may deduct any debt or sum not received in an income year but which is deemed to be derived in that income year and which is proved to have become irrecoverable by the company.”

28. That the bad debt written off met the required criteria for the following reasons:a.The loans were unsecured and there was no security attached to recover them when the subsidiaries wound up.b.Debts owed by any person in bankruptcy or in the process of winding up maybe allowed as bad even when the outcomes of any recovery action are not finalized at the time the debt is written off by the taxpayer.

29. That the said bad debts were thus correctly accounted for and deducted under Section 60 of the Income Tax Act of Mauritius.

30. The Appellant proffered an alternative argument that if the Tribunal finds that the Appellant had a permanent establishment in Kenya then it would rely on Section 15(2) (a) of the ITA which allows for deductions for tax purposes.

31. That the provision for bad debts should be allowed under Paragraph 1 of Legal Notices 37 of 2011 as it had taken reasonable steps to collect them without any success.

32. That according to Legal Notice Number 37 of 2011, a debt shall be deemed to have become uncollectable where: -a.The creditor loses the contractual right that comprises the debt through a court order;b.No form of security or collateral is realizable whether partially or in full;c.The securities to collateral have been realized but the proceeds fail to cover the entire debt;d.The debtor is adjudged insolvent or bankrupt by a court of law;e.The costs of recovering the debt exceed the debt itself; orf.Efforts to collect the debt are abandoned for another reasonable cause.

33. The Appellant averred that it had met these conditions to cause its debt to be a deductible expense under Kenyan law because its debt lacked security and the debtor had also been wound up. That having met one of the guidelines, it was entitled to the deduction as was stated in the case of Equity Bank Kenya Limited V. Commissioner of Domestic Taxes [2021] eKLR.

34. That the Respondent should be estopped from disallowing the bad debt expenses by the Appellant which in the Respondent’s admission resulted from an entity which has closed, thus meeting both the test under Mauritian Law (Statement of Practice SP 9/11) and Kenyan Law (Legal Notice 37 of 2011).

Profit on disposal of asset 35. The Appellant stated that the Respondent had erroneously included proceeds on disposal as a taxable item under Corporate income tax for the Appellant of USD 4,861,605 on the basis that the amounts picked by the Respondent were erroneous and the Respondent had also assessed the wrong tax head.

36. It stated that in its workings, the Respondent erroneously picked the amount of USD 4,861,605 whereas the correct amount in the financial statements was USD 4,442,500 hence the reason for its erroneous conclusion.

37. On the averment that Respondent assessed the wrong tax head, the Appellant stated that in October 2019, it acquired a license for operation in Nigeria. That thereafter in 2020 it entered into an agreement to sell its stake in Visatech Limited from which it received proceeds recognized in its financial statements.

38. That its financial statements categorized this income as revenue from customer stakes. That, therefore, the inclusion of these proceeds on the disposal sale of a subsidiary as a Corporate income tax item instead of capital gain was erroneous and contravened the principles of ‘badges of trade.’

On Withholding Tax 39. The Appellant opined that its WHT assessment was erroneous because:i.The Appellant is not a tax resident in Kenya.ii.The payments did not fulfil requirements under Section 10 of the ITAiii.The Respondent subjected ‘other expenses’ which are not subject to WHT.

40. That in any event, and on a without prejudice basis, the payments subject to WHT did not meet the requirements of Sections 10 and 35 of the ITA which deems certain payments subject to WHT provided they are incurred in the production of income in or derived from Kenya.

41. That its payment did not satisfy the requirements of Sections 3 and 10 of the ITA as “being accrued or derived from Kenya’, and such payment would not be subject to income tax in Kenya under the ITA.

42. That the payments subject to withholding tax are very specific and include but are limited to interest, dividends, commission, royalties, and rent among others but ‘other expenses’ are not subject to WHT under Section 35 of the ITA.

43. That the Respondent’s assessment was thus erroneous and should be vacated.

44. The Appellant further stated that the Respondent also used the wrong tax base to determine the tax liability for the Appellant as shown in the table below:2020 2021

Professional fees in USD 5,185. 70 229,893. 00

Professional fees in Kshs 552,121 25,207. 767

WHT @ 15% 82,818 3,781,165

On Deemed Interest 45. The Appellant postulated that the Respondent erroneously assessed the deemed interest of Kshs. 802,523,186. 00 as deemed interest for 2020 and 2021 and yet:a.The Appellant was not a tax resident in Kenya and therefore had no basis to collect WHT on payments made on purported tax residency.b.The said payments did not relate to the production of income that is taxable in Kenya as is provided for in Section 10 of the ITA.c.The loan did not emanate nor was it utilized to produce taxable business income in Kenya.

46. It concluded that the funds in question are equity in nature and therefore not subject to deemed interest.

On Pay as You Earn (PAYE) 47. The Appellant opposed the assessment under PAYE because: -i.It was not a tax resident in Kenya.ii.The Respondent erred in including foreign staff in the assessment.iii.The Respondent included personnel who have since left the business including Oliver Bates and Jason Gibson who since left the business.

48. The Appellant argued on residency, that for a person to be appointed as a tax representative of another person, such a person must come within the ambit of Section 15(1) of the TPA which specifies persons who can be appointed as tax representatives. That the persons listed under Paragraph 15(1) of the TPA are strictly individuals and thus Zumandu Limited, which is a body corporate, is not eligible for appointment as the Appellant’s tax representative under Section 15(1)(b), (g), (i) and (j) of the TPA.

49. That moreover, Zumandu Limited does not fit the criterion under Paragraph (b) of the definition of a company since the definition caters for organizations that are declared to be companies by the Cabinet Secretary in Kenya.

50. That the Respondent has misdirected itself by appointing an unqualified person, which is also a corporate body, contrary to Sections 15 and 15A of the TPA to be an agent, and as such the said appointment must be vacated/nullified for want of legal merit.

On Applicability of Penalty and Interest 51. The Appellant alleged that the Respondent has levied a penalty of 5% and interest at 1% on it without stating the statutory basis of levying the said penalty and interest. That failure to expressly state the said legal provisions has limited its ability to respond to the same.

52. That in addition, the said assessment by the Respondent and the attendant penalties and interest are erroneous.

Appellant’s prayers 53. For the reasons set out above, the Appellant prayed that:a.The Respondent’s demand for penalty dated 16th June 2023 be set aside/ struck out in its entirety.b.The Respondent’s action to demand tax despite logical and cogent explanations being given to them be declared arbitrary, capricious, unreasonable, unfair and contrary to the administration of justice and legitimate expectation of the Appellant.c.The Respondent, its employees, agents/other persons purporting to act on its behalf be barred and or estopped from demanding or taking any further steps toward enforcement or recovery of tax on the Respondent's demand as stipulated above.d.The costs of this Appeal; ande.Any other remedies that the Tribunal deems just and reasonable.

Respondent’s Case 54. The Respondent premised its case on its Statement of Facts dated 30th August 2023 and filed on 31st August 2023 and the written submissions dated 10th April 2024.

55. The Respondent stated that Sections 29, 30 and 31 of the Tax Procedure Act give it the powers to make an assessment, to make an advance assessment, and to amend assessments based on the available information and to the best of its judgment.

On Residency for tax purposes 56. The Respondent averred that the term resident under Section 2 of the ITA does not seek to limit the concept to the place where organs of the company exercise legal effective authority. That a company can be resident in Kenya if management and control of its affairs are exercised in Kenya, without it having to be incorporated under the laws of Kenya.

57. That the effective place of management is provided for under Article 4(1) of the OECD -Model Tax Convention concerning taxes on Income tax and Capital.

58That Article 4(3) of the OECD- Model Tax Convention further provides in Paragraph 4(1), that where a person other than an individual, is a resident of both country states then it shall be deemed to be a resident only of the state in which its place of effective management is situated.

59. The Respondent averred that the residency test is factual and to this end, the circumstances relevant to identifying the location of a company’s management and control include, but are not limited to;a.where the company’s meetings, including its directors’ meetings, are held and where the key decisions of the company are made;b.the residency of the company’s directors;c.the residency of the company’s shareholders.

60. The Respondent submitted that it established that the Appellant is incorporated in Mauritius but it noted the following on the management and control of the Appellant;a.The records it obtained showed that Mr. Udayesing Bheegoonath; Mr. Ashvin Duljeet; Mr. Victor William Chandler; Mr. Michael Gary Carlton and Mr. Jason Neil Gibson are the directors of the Appellant.b.Only two (2) of the Appellant’s Directors listed are residents in Mauritius i.e. Mr. Udayesing and Mr. Duljeet. That the other three directors are not residents of Mauritius.c.Records obtained by the Respondent further indicated that the Appellant has two employees and the employment contract of Mr. Jason Neil Gibson and Me. Dean Delaney shows that their place of work is in Nairobi.d.The directors in Mauritius are nominee directors from Mauritius Ltd an entity offering international fund services including management company services and fund administration among other services with locations in Luxembourg, Guernsey, South Africa and the United Kingdom.e.Zumandu Limited, a subsidiary of the Appellant, traded in Kenya as Betlion, a registered trademark in Kenya, which was established by one of the directors Victor William Chandler.f.Mr. Oliver Bates; Mr. Jason Neil Gibson; and Mr. Victor William Chandler were running the business of the Appellant from Kenya.g.The Group CEO, Mr. Oliver Bates; the Group Operations Director, Mr. Bulent Boytorun; the Regional Managing Director, Mr. Spencer Okach and the Group Marketing Director, Mr. Jason Gibson were all based in Kenya.h.The board resolution availed by the Appellant showed that the directors only adopted decisions that had already been made without discussions on actual business strategies of running the business but rather only on reporting in Mauritius. That this shows that the directors in Mauritius did not run the business of the Appellant from Mauritius.

61. The Respondent averred that Maitland was a global advisory, administration firm which provides legal, fiduciary investment and fund administration services to private, corporate and institutional clients of the Appellant across multiple jurisdictions and specializes in helping its clients take advantage of the complex cross border transactions that benefit it. That Mailand therefore assists its clients in the structuring and administration of their outbound international investments.

62. The Respondent further averred that the two Maitland nominee directors, Udayesing and Mr. Duljeet did not run the business of the Appellant and therefore have no voting power on key strategic decisions of the company. That in any case the management and control are a question of fact which is determined by what happens and is not determined by legal references or restrictions on who may exercise it.

63. That the information available to it showed that Mr. Oliver Bates; Mr. Jason Neil Gibson; and Mr. Victor William Chandler were running the business of the Appellant from Kenya.

64. The Respondent submitted that while it is a settled fact that the two directors, Mr. Jason Neil Gibson and Mr. Victor William Chandler, are not Kenya citizens, residency is never a question of citizenship and as such, the information page of the passports is conclusive evidence to show that the directors were not in Kenya.

65. It submitted that in the absence of any evidence showing the contrary, the directors managing the business of the Appellant group are resident in Kenya and also actively manage and control the business from Kenya and therefore the place of management and control of Appellant was in Kenya.

66. The Respondent postulated that there is no evidence that the Appellant had employee assets in Mauritius or that the directors and the management team of the Appellant group were running its strategic business from Mauritius or any other place outside Kenya.

67. That it is not disputed that the two (2) nominee directors in Mauritius are employees of the management /administrative company Maitland (Mauritius), which does not make the key decisions of planning, organizing, staffing, directing and controlling the management and policies of the business of the group.

68. That it was its view that the management and control of the affairs of the Appellant was exercised in Kenya through the active role of the directors and the group management team in Kenya, and hence the reason why the Appellant qualifies as a tax resident in Kenya.

69. The Respondent posited that the Appellant’s gains and profits from the business were taxable in line with Section 3(2)(a)(i) of the Income Tax Act (ITA) and it was also liable to withhold income taxes on payments made like management, professional or technical fees and which attract withholding tax in line with Section 35 of the Income Tax Act.

70. The Respondent submitted that the facts available led it to the conclusion that management and control of the affairs of the Appellant were exercised in Kenya through the active role of the directors and the group management team in Kenya, hence the Appellant qualified as a tax resident in Kenya and was liable to pay taxes in Kenya under the provision of the Income-tax Act. It supported its theory of management and control with the following cases:a.De Beers Consolidated Mines Ltd v Howe 5TC198 (De Beers Case)b.Malayan Shipping Company Ltd V Federal Commissioner of Taxation, (1946) 3 ALTR 258c.The Bywater Investment Limited & Ors V Commissioner of Taxationd.Hua Wang Bank Berhad v Commissioner of Taxation [2016] HCA45 (Bywater)

On Withholding Tax 71. The Respondent submitted that having established that the Appellant, being a shell entity registered in Mauritius was required to adhere to the tax laws in Kenya including filing all tax returns (Income tax, WT, VAT and PAYE) before the due date and paying all taxes thereon. That it was also required to withhold tax on the following:

i. Withholding Tax on Management and professional fees paid to third parties between January 2020 to December 2021. 72. The Respondent averred that these are payments made to various providers net of any declared income in Kenya for services which are like the management, professional or technical fees that ought to attract withholding tax in line with Section 35 of the Income Tax Act.

ii. Withholding Tax on deemed interest expense 73. The Respondent submitted that the Appellant’s financial statements show that the group had interest-free loans from its ultimate shareholder. That there was no information provided on the owners of the funds, the source of the funds and the source of income.

74. The Respondent averred that Section 16(1) (a) (i) of the Tax Procedures Act provides that deemed interest includes loans advanced to the company by a non-resident associate of the non-resident company controlling the resident company where the person is controlled by a non-resident person alone or together with not more than four other persons, and where the Company is not a bank or a financial institution licensed under the Banking Act.

75. That it is not in dispute that the Appellant received interest-free loans from its related non-resident. That it thus deemed this as interest at the deeming rates and charged withholding tax on deemed interest under Section 35(1) of the Income Tax Act.

On PAYE 76. The Respondent posited that its reconciliation of employee emoluments, as declared in the financial accounts of the Appellant vis-à-vis the amounts declared by Zumandu Limited, showed that there were benefits paid by the Appellant or its affiliates to its employees. That a further review of the bank statements of the Appellant in Mauritius showed monthly salary payments to various employees who reside in Kenya.

77. The Respondent averred that the Appellant did not file any PAYE returns in Kenya even though there were no employees in Mauritius.

78. That the Appellant did not declare or provide evidence that its PAYE had been accounted for in a different jurisdiction so that it could claim credit in line with Section 42 of the Income Tax Act.

On Disallowed costs 79. The Respondent stated that the Appellant claimed costs in relation to operating expenses but did not provide any documentation to support the costs in line with the requirements of Section 15 of the Income Tax Act.

80. The Respondent maintained that Section 15 of the Income Tax Act requires any allowable expenses to be wholly and exclusively incurred in the generation of that income. That there was no evidence provided to show that the expenses were actually paid for by the Appellant and not its operating companies whose expenses had already been allowed by the operating companies.

On Bad debt and expenses disallowed. 81. The Respondent attested that it was justified in disallowing the write-off because the Appellant failed to satisfy the requirements under Legal Notice No. 37 of 2011 to warrant allowance of bad debts.

On Appointment of tax representative 82. The Respondent was of the view that Section 3 of the TPA defines a person to include an individual, company, partnership, limited partnership, association of persons, trust, National Government, foreign Government, political subdivision of the National Government or foreign Government, or an international organization.

83. Section 15(1) (j) of the TPA provides that a person is the tax representative of another person for the purposes of this Act or a tax law, in the case of any person including a person referred to in Paragraphs (a) to 97(j) , if that person is the agent or representative of the person as provided for under a tax or specified by the Commissioner, by notice in writing to the agent or representative.

84. It submitted that based on the definition of the word “person” as captured by Section 3 as read with Section 15(1) (b) and 15(1) (j) of the TPA its action in deeming Zumandu Limited as the tax agents of the Appellant was within the ambit of the law. That its decision was justified and lawful.

On Applicability of penalty and interest. 85. The Respondent stated that the penalty and interests were charged accordingly under the relevant tax and the Appellant has not demonstrated how the same was irregular or contra statute.

On the burden of proof 86. The Respondent submitted that the Appellant failed to provide any Board Minutes to prove that substantive board meetings took place in Mauritius. That the only minutes provided during the Objection stage are two sets of board meeting minutes for the year 2017 which were conducted on 23rd January 2017 and 14th march 2017.

87. That in the circumstances, the Appellant had failed to prove that the management and control were done outside Kenya. That from the Minutes availed during the objection, there was no evidence of any decisions being made that would amount to management and control therefore failing to discharge the burden of proof that is envisaged by the Tax Appeals Tribunal Act.

88. The Respondent submitted that the onus was on the Appellant to avail all the relevant information to demonstrate that the control and management was done in Mauritius but it failed to demonstrate that, and thereby failed to discharge its burden of proof.

Witness testimony 89. The Respondent’s witness, Phillip Munyao testified that during the audit, it was discovered that the Appellant was a shell company in Mauritius and a tax resident of Kenya hence the reason why it severed it with additional assessments. That its registered address in Mauritius is C/o Maitland (Mauritius) Limited, Suite 420, 4th Floor, Barkly Wharf, Le Caudan Waterfront, Port Lois, Mauritius.

90. It was its view that:a.The two Maitland Mauritius were nominee directors, Mr Udayesing and Mr Duljeet, who did not run the business of the Appellant and therefore had no voting power on key strategic decisions of the company.b.The information available showed that Mr. Oliver Bates; Mr. Jason Neil Gibson; and Mr. Victor William Chandler were running the business of the Appellant from Kenya.

100. He stated that where there is a claim that part of the management team exercised the management and control function from elsewhere other than Kenya while a part of the team was in Kenya, then a case of dual residence arises and both jurisdictions have taxing rights over that income, and the double taxation arising thereof can only be dealt with under a Double Tax Agreement where applicable.

101. That for Corporation tax, the Appellant had gains and profits from business hence taxable in line with Section 3(2)(a)(i) of the Income Tax Act.

102. The witness testified that the Appellant claimed costs in relation to operating expenses but did not provide any documentation to support the costs in line with the requirements of Section 15 of the Income Tax Act. That the Appellant also failed to provide all the supporting evidence like financial accounts, trial balances, ledgers and source documents to enable the Respondent to subject these costs to the allow-ability test as outlined in Section 15 of the Income-tax Act as well as Legal Notice No. 37 of 2011.

Respondent’s prayers 103. The Respondent’s prayer to the Tribunal was for orders that:i.The objection decision dated 16th June 2023 confirming Kshs. 440,381,166. 00 constituting principal taxes of Kshs. 337,391,25. 00, penalties of Kshs. 16,869. 00 and interest of Kshs. 86,120,065. 00 be upheld as it is valid and proper in law.ii.The Appeal be dismissed with costs to the Respondent as it lacks merit.

Issues For Determination 104. The Tribunal upon due consideration of the pleadings, written submissions, documentary evidence and the testimony of the Respondent’s witness has determined the following as the issues falling for determination in this Appeal:a.Whether the Respondent erred in the appointment of a tax representative.b.Whether the Appellant was a tax resident in Kenya.c.Whether the Respondent was justified in issuing its Objection decision dated 16th December 2023.

Analysis And Determination 105. The Tribunal having ascertained the issues falling for determination as set out above proceeds to deal with the same separately as hereunder.

a. Whether the Respondent erred in the appointment of a tax representative 96. The Appellant argued that the persons capable of being appointed as tax representatives under Section 15(1) of the TPA are only individual persons. 106. The Respondent argued that the word person included both individual persons and corporate entities and hence its decision to appoint Zamandu Limited as a tax representative of the Appellant was lawful.

107. Section 15(1) of the TPA provides as follows regarding persons who could be appointed as tax representatives:“(1)A person is the tax representative of another person for the purposes of this Act or a tax law, in the case of—a.…(b)........(j)any person (including a person referred to in paragraphs (a) to 97 (j) ,if that person is the agent or representative of the person as provided for under a tax law or specified by the Commissioner, by notice in writing to the agent or representative.”

108. Plain reading of Section 15(1)(j) of the TPA implies that any person who is a tax agent or representative of the taxpayer under a tax law or as specified by the Commissioner in writing may be appointed a tax representative of a taxpayer.

109. The law thus imputes that the Commissioner has the discretion and power to appoint any person who as a tax representative of the Appellant to be its tax representative for tax purposes.

110. Section 1 of the TPA has defined a person as thus:“person” includes an individual, company, partnership, limited partnership, association of persons, trust, National Government, foreign government, political subdivision of the National Government or foreign government, or an international organization;”

111. This definition implies that the term person includes both individual persons and corporate entities like Zamandu Limited. The Respondent did not therefore fall into error when it appointed Zamandu Limited as a tax representative of the Appellant.

b. Whether the Appellant was a tax resident in Kenya. 112. The parties agree that the Appellant was not a resident of Kenya as envisaged under Section 2 of the ITA. Their point of divergence is whether the Appellant had a place of effective management (PEM) in Kenya.

113. The Appellant argued that it did not have a PEM in Kenya because all its directors were based outside Kenya and its directors namely Udayesing Bhheergoonath and Ashvin Duljeet are not involved in the management of the company.

114. The Respondent on the other hand holds the view that the Appellant had its PEM in Kenya because its management and control were exercised in Kenya because the directors and shareholders resided in Kenya, held their meetings in Kenya and also made key decisions in Kenya.

115. A resident is defined under Section 1 of the ITA as follows:“(b)to a body of persons, means -i.that the body is a company incorporated under a law of Kenya; orii.that the management and control of the affairs of the bodywas exercised in Kenya in a particular year of income under consideration; …”

116. From this definition, it is clear that a resident when applied to a body corporate under the definition of residency in Section 1(b)(ii) of the ITA means the place where the management and control of the affairs of the body were exercised in that particular year under consideration.

117. The formula, method or model to be used in determining the place where management and control of affairs of the company was exercised has not been defined. The Tribunal is then left to rely on case laws and international legal instruments to guide it in identifying the Appellant’s place of effective management (PEM). This position was affirmed by Visram (J) (as he then was) in Unilever Kenya Limited vs The Commissioner of Income Tax (Income Tax Appeal No. 753 of 2003) [2005] eKLR when he said that: -“I have no doubt in my mind that the OECD principles on income and on capital and the relevant guidelines such as “Transfer Pricing” principles, the CUP method adopted for calculations of what ought to be the income, the Cost Plus Return method as well as Resale Minus Method adopted for looking into compliance with arm’s length principles are not just there for relaxed reading. These have been evolved in other jurisdictions after considerable debates and taking into account appropriate factors to arrive at results that are equitable to all parties. The ways of doing modern business have changed very substantially in the last 20 years or so and it would be fool-hardy for any court to disregard internationally accepted principles of business as long as these do not conflict with our own laws. To do otherwise would be highly short-sighted.”

118. Whereas the OECD Guidelines can be used to help the Tribunal determine the residency of the Appellant in this Appeal, the Tribunal has cautioned itself that the Guidelines are applicable only in cases where there is a lacuna in the Kenyan tax statutes.

119. Article 4, Paragraph 3 of the Articles of The Model Convention with respect to taxes on Income and on Capital [as they read on 21st November 2017] states as follows concerning the definition of a resident:“Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavor to determine by mutual agreement the Contracting State of which such person shall be deemed to be a resident for the purposes of the Convention, having regard to its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors.”

120. From this description, it is clear that the place of effective management is the pivot that determines the residency of a corporate entity like the Appellant.

121. The OECD Commentaries on the Articles of The Model Tax Convention have guided the interpretation of the term PEM. Commentary on the Article states as follows in Paragraph 21 concerning the definition of a resident.“It would not be an adequate solution to attach importance to a purely formal criterion like registration. Therefore paragraph 3 attaches importance to the place where the company, etc. is actually managed.”

122. Paragraph 24 thereof has defined PEM as follows;“The place of effective management is the place where key management and commercial decisions that are necessary for the conduct of the entity’s business as a whole are in substance made. All relevant facts and circumstances must be examined to determine the place of effective management. An entity may have more than one place of management, but it can have only one place of effective management at any one time.”

123. In view of the above provisions of the law, the Tribunal has recently explained the meaning of the term PEM in the Judgment inTat No. 65 Of 2023 M-Kopa Llc (C/O M-Kopa Kenya Limited) Vs. Commissioner Of Domestic Taxes when it stated as thus:“The POEM is thus where the company is actually managed. Put another way, it is where the key management and commercial decisions that are necessary for the conduct of the entity ‘s business are in substance made. This definition is aligned and consistent with the ITA which has defined a resident in regard to corporate persons to mean the place where management and control of the affairs of the corporate body was exercised.”

124. PEM is thus where the key management and commercial decisions necessary for the conduct of the entity’s business are in substance made.

125. This view is aligned with the UK case of Trevor Smallwood Trust v Revenue and Customs, [2008] UKSPC SPC00669 where it was held that:“The POEM was where the key management and commercial decisions that were necessary for the conduct of the entity's business were in substance made, which would normally be where the most senior persons, such as the board of directors, made their decisions. The directors could not be regarded as a rubberstamp or puppet if they applied their minds to the decision-making process.”

126. Having determined what constitutes a PEM the Tribunal shall now proceed to determine whether the Appellant had its PEM in Kenya.

127. The Respondent postulated that it had held that the Appellant had a PEM in Kenya for the following reasons:a.That the company’s meetings, directors' meetings and key decisions were made in Kenya.b.That the directors making key decisions were residents of Kenya.c.The shareholder's residency was in Kenya.

128. The Respondent further averred that:a.The employment contract of two employees namely Mr. Jason Neil Gibson and Mr. Dean Delaney’s place of work was in Nairobi.b.The directors in Mauritius are nominee directors from Maitland which is a global advisory firm which assists its clients with structuring and administration of outbound international investments.c.The two Maitland nominees namely Mr. Udayesing and Mr Duljeet did not run the business or have voting rights on key and strategic decisions of the company.d.The directors in Mauritius merely adopted the decisions that had already been made.

129. It also posited that the Appellant failed to provide board Minutes to prove that the meetings took place in Mauritius. That only two sets of Minutes were provided.

130. The Appellant responded that its board members are not residents in Kenya; and that the two directors namely Mr. Udayesing and Mr Duljeet are not involved in the management of the company.

131. It is settled law that the burden of proof in tax matters rests with the Appellant as espoused in Section 30 of the TAT Act which states as thus:-“In a proceeding before the Tribunal, the appellant has the burden of proving –a.where an appeal relates to an assessment, that the assessment is excessive; orb.in any other case, that the tax decision should not have been made or should have been made differently”

132. Determination of a company’s PEM is a question of fact. Consequently, it was not enough for the Appellant to aver that its tax residency was in Mauritius. It needed to prove that the said residency was indeed based in Mauritius and that the Respondent’s assertion that it was based in Kenya was erroneous.

133. Nothing was tabled before the Tribunal by the Appellant to show that the real conduct of the Appellant’s business was carried out in Mauritius as was held in De Beers Consolidated Mines Ltd v Howe [1906] AC, 455 where the court stated thus regarding residency:-“The head and brains of the company are, as it appears to me, to be found in London, and the real conduct of the adventure takes place there. It does not matter in my opinion whence the subject matter with which the business deals is drawn; the inference which I draw from the facts is that the real business of the company is carried on in London.” (emphasis added).

134. The Appellant was obligated to specifically traverse the Respondent’s assertion by for example:a.Providing proof through Minutes of meetings to confirm that director’s meetings and core decisions of the company were made in Mauritius.b.Providing proof through employment contracts to show that its two employees namely Mr. Jason Neil Gibson and Mr. Dean Delaney did not have their place of work in Kenya and that if they are based in Kenya then they don’t hold positions from where they can make decisions affecting the core operations of the company.c.Explaining the position held by My Jason Gibbs within the Appellant’s establishment and why he signed a contract between the Appellant and Dean Delaney in the capacity of CEO of the Appellant.d.Providing evidence of whether the normal place of work for Mr. Jason Gibbs and Dean Delaney was in Nairobi.e.Explaining why the fact that Mr. Jason Gibbs had signed a contract on its behalf as the CEO did not amount to a key management decision by the company.f.Explaining why having an employee based in Nairobi and making key decisions on its behalf did not amount to the creation of residency in Kenya.

135. The Appellant had the statutory burden of responding to and addressing all these issues that were raised by the Respondent. It is only after it has addressed those issues would the burden of proof shift to the Respondent.Its failure to discharge its burden of proof meant that the Respondent’s decision that it was managed and controlled from Kenya is presumed to be correct and affirmed. This was the decision of the High Court in Kenya Revenue Authority v Maluki Kitili Mwendwa [2021] eKLR where Justice Mativo, as he then was, stated as follows:“Regarding the second justification, a presumption of correctness arises from the Commissioner’s determination/assessment. The presumption remains until the taxpayer produces competent and relevant evidence to support his/her position. When the taxpayer comes forward with such evidence, the presumption vanishes and the case must be decided upon the evidence presented.”

136. Accordingly, and based on the above analysis, the Tribunal upholds the Respondent’s decision that the Appellant’s PEM was in Kenya.

c. Whether the Respondent was justified in issuing its Objection Decision dated 16th December 2023. 137. The Respondent’s assessment against the Appellant was under the following heads: Corporation tax, Withholding tax and PAYE.

i. Corporation Tax 138. The Appellant argued under this head that the Respondent’s assessment was fundamentally flawed because it had used the combined trial balance and financial statement of the group and not the Appellant’s financial statement in its assessment.

139. That the Respondent also erroneously disallowed its bad debts when it had met the statutory conditions for writing off the bad debts.

140. Its final argument was that the Respondent had erroneously included proceeds on disposal as a Corporate income tax item instead of a capital gains tax item.

141. The Respondent responded that the bad debts were disallowed for failure to meet the threshold set out under Legal Notice No. 37 of 2011. That costs related to operating expenses were disallowed because the Appellant failed to provide a detailed breakdown of costs and documentary evidence supporting the costs incurred.

a. On Consolidated group assessment 142. On the issue of whether the Respondent assessed against the group instead of the Appellant, the Tribunal has noted that the Appellant provided financial statements of its Kenyan, Uganda and Zambia subsidiaries for the years 2018 to 2021 in its objection dated 9th May 2023.

143. The audited statements were the only documents provided to prove this assertion. The Respondent on its part assertted that it was not provided with additional documents like invoices, trial balance and ledger to help it determine the income distribution among the related entities.

144. The Tribunal is of the view that an audited financial statement, by itself, may not be sufficient in proving the income stream of an individual. A person who seeks to rely on audited financial statements is behoved to provide documents like invoices, bank statements, receipts, ledgers and other related documents that it relied on to make its audited accounts. This way, the Respondent can walk with it and verify the output in the financial statement.

145. The Appellant did not provide these documents in its objection, and the Respondent pointed out that it was the failure to provide these documents that led it to uphold the Corporation tax liability assessments.

146. The burden placed on the taxpayer to provide documents or evidence to discharge its burden of proof was discussed in the Judgment – Tat 1296 Of 2022 James Finlay (Kenya) Limited Vs. Commissioner Legal Services & Board Coordination where the Tribunal stated as thus:-“From the above decision of the superior court, it is apparent that once the Appellant is served with an assessment, the Appellant ought to push back and show that the assessment was incorrect by providing positive evidence. In the instant case, the Tribunal found that the Appellant failed to address the specific documents mentioned by the Respondent in the objection decision and therefore failed to discharge the burden of proof.”

147. The Appellant’s failure to provide positive documents that could support its supposition was thus its waterloo in this Appeal. The Respondent therefore did not fall into error in its Corporate tax assessment under this sub-heading.

b. On bad debts 148. The Guidelines which set out the criteria for writing off bad debts and the deductibility of such bad debts have been provided for under the Legal Notice No.37 of 2011. Paragraph 1 thereof provides that: -“a debt shall be considered to have become bad if it is proved to the satisfaction of the Commissioner to have become irrecoverable after all reasonable steps have been taken to collect it.”

149. Paragraph 2 enumerates the circumstances under which the debt is considered uncollectable and capable of being written off as follows;“a.. the creditor loses the contractual right that comprises the debt through a court order;b.no form of security or collateral is realizable whether partially or in full;b.the securities or collateral have been realized but the proceeds fail to cover the entire debt;b.the debtor is adjudged insolvent or bankrupt by a court of law;b.the costs of recovering the debt exceeds the debt itself;f.efforts to collect the debt are abandoned for another reasonable cause.”

150. The importance of Legal Notice No.37 of 2011 is that it ought to be demonstrated to the Commissioner that all efforts have been made to collect a debt as cited in Commissioner of Domestic Taxes vs. Kenya Maltings Ltd (2013) eKLR.

151. It is also vital to note that Section 15 (2) (a) of the ITA also stresses that the proof that the debt has been rendered uncollectable and therefore a bad debt or doubtful debt ought to be a reasonable estimation based on the facts and information provided by a taxpayer. In this regard, therefore, it is incumbent on the Commissioner to consider all the circumstances of a taxpayer’s business model and operations to arrive at a fair determination.

152. The Tribunal wished to once more reiterate that the Appellant was under obligation to provide evidence on a balance of convenience that the Respondent erred in its assessment in disallowing its bad debts.

153. The Appellant stated that it had disbursed an unsecured loan to its Ugandan and Rwandan subsidiaries. That both companies were wound up and the amounts owed by them became uncollectible.

154. However, the only way through which the Appellant could fall within the favourable remit of Paragraph 2 of Legal Notice No. 37 of 2011 would have been if it supplied documents to show that:a.The loan was disbursed to these subsidiaries.b.An agreement or related document confirming that it was an unsecured loan.c.Evidence to show that a winding up order had indeed been issued by courts of competence jurisdiction against these two companies.

155. Its failure to provide evidence that ought to be in its custody considering that it is the entity that issued the loan and it must have relied on a winding up order to include these alleged bad debts in books of account means that the Appellant failed to discharge its burden to show that the Respondent had erred in disallowing its bad debts expenses.

c. Profit on disposal 156. The contention under this head was that Corporate income tax instead of capital gains tax had been assessed on disposal of the Appellant’s stake in Visatech Limited.

157. The Tribunal has noted that this issue was not raised in the Appellant’s objection dated 9th May 2023. It was thus not addressed by the Respondent in its objection.

158. Section 12 of the TAT Act provides thus regarding appeals to the Tribunal:“A person who disputes the decision of the Commissioner on any matter arising under the provisions of any tax law may, subject to the provisions of the relevant tax law, upon giving notice in writing to the Commissioner, appeal to the Tribunal.”

159. The issue of tax that was charged on disposal of the asset was not raised in the assessment dated 23rd March 2023, it was not a subject of response in the Appellant’s objection dated 9th May 2023 and it was also not included in the Respondent objection decision of 16th June 2023.

160. It is thus clear that the Appellant's decision to bring up this issue at the Appeal stage amounts to requesting the Tribunal to decide for the Respondent on an issue that it never considered and or made a decision on. Such an action by the Tribunal would be ultra vires.

ii. Withholding Tax 161. The Appellant stated that this assessment was erroneous because it was not a tax resident in Kenya and that the WHT demand did not meet the threshold set out in Section 10 of the ITA.

162. The Respondent asserted that the Appellant was resident in Kenya and hence obliged to withhold tax for services which are in the nature of management, professional or technical services.

163. Section 10 of the ITA provides as follows regarding WHT:“(1)For the purposes of this Act, where a resident person or a person having a permanent establishment in Kenya makes a payment to any other person in respect of –...Provided that –i.this subsection shall not apply unless the payment is incurred in the production of income accrued in or derived from Kenya or in connection with a business carried on or to be carried on, in whole or part, in Kenya;”

164. Rule 4(1) of The Income Tax (Withholding Tax) Rules 2001 states as follows on the application of WHT:“A person who makes a payment of, or on account of, any income which is subject to withholding tax shall deduct tax therefrom in the amount specified –”

165. A wholesome reading of the above provisions of the law makes it apparent that a resident of Kenya is required to withhold and pay WHT if it is involved in payments made under Section 35(1) of the ITA.

166. The Appellant alleged that the transactions in question were not accrued or derived from Kenya. Although the Appellant assertted that it was the Respondent who was required to provide evidence that the payment had been incurred in the production of income in Kenya.

167. The Tribunal reiterates that the burden of proof in tax cases as espoused in Section 30 of the TAT Act is on the Appellant. It was thus the responsibility of the Appellant to prove that the payment was not in regard to the production of income.

168. That being the case, the Tribunal has concluded that the Appellant was a resident in Kenya and it was thus obliged to withhold and submit WHT regarding payment of any amounts to any non-resident persons not having a permanent establishment in Kenya as is provided in Sections 10 and 35 of the ITA.

169. The Tribunal’s attention has also been drawn to Section 35(6) of the ITA which provides that the Commissioner could claim taxes from a taxpayer who fails to make a deduction as though the taxes were due from them.

170. The Tribunal has also noted that the Appellant’s WHT was levied on professional services which were in the nature of management and professional services for the period 2020 to 2021.

171. The Appellant’s argument that the withholding tax was levied based on other expenses is thus baseless because the Respondent was clear that WHT was based on management and professional services.

172. The Appellant’s argument that the Respondent erred in deeming its interests because it was not a tax resident in Kenya is also without basis considering that the Tribunal has held that the Appellant had a PEM in Kenya.

173In addition, the Appellant has not disputed the Respondent’s assertion that it had received interest-free loans from its related non-resident and hence the reason for the charging of the WHT on the deemed interest under Section 35(1)(e) of the ITA. This assessment was hence proved as it was not displaced by the Appellant who bore the burden of proving that this assessment was erroneous. The Respondent thus did not err in its assessment of WHT against the Appellant.

iii. PAYE 174. The Appellant contended that it was not obliged to pay PAYE because it was not a tax resident and that the Respondent also erred in including foreign staff in its assessment.

175. The Respondent asserted that benefits that were taxed were paid by the Appellant to its employees and a review of the Mauritius bank statements show monthly salary payments to various employees who reside in Kenya.

176. Section 5(1)(b) of the ITA provides as follows regarding the taxation of income from employment.“5. (1)For the purposes of section 3(2)(a)(ii), an amount paid to –(a)a person who is, or was at the time of the employment or when the services were rendered, a resident person in respect of any employment or services rendered by him in Kenya or outside Kenya; orb.a non-resident person in respect of any employment with or services rendered to an employer who is resident in Kenya or the permanent establishment in Kenya of an employer who is not so resident, shall be deemed to have accrued in or to have been derived from Kenya.”

177. Section 1 of the ITA defines an employer as:-“employer" includes any resident person responsible for the payment of, or on account of, emoluments to an employee, and an agent, manager or other representative so responsible in Kenya on behalf ofa.non-resident employer;”

178. Section 1 as read with Section 5(1) of the ITA makes it clear that amounts paid to a resident for employment services rendered in Kenya or outside Kenya; and to a non-resident for services rendered to an employer who is resident in Kenya or has a PE in Kenya in regards to an employer who is not a resident shall be liable to payment of tax.

179. The Respondent’s assertion that salaries of the employees who reside in Kenya were paid from Mauritius and that the Appellant also paid benefits to its employees has not been disputed and or traversed with the support of evidence by the Appellant. This type of payment falls within the ambit of section 5(1) of the ITA.

180. The Appellant was also under liberty in the course of the objection and indeed before this Tribunal to table evidence including its Mauritian bank statements to show that the Respondent’s assessment was erroneous, but this was not done. It also had the right to present its PAYE that was paid out of jurisdiction to claim credit for such payments in line with Section 42 of the ITA, but again this was not done.

181. Accordingly, the payments made to the employees based in Kenya were taxable irrespective of the location from where the payment emanated . This view aligns with the decision in Everret Aviation Limited V Kenya Revenue Authority (Through The Commissioner of Domestic Taxes) [2013] eKLR where the court held as thus:“To that extent, and though not before me on this appeal, the Local Committee would have been entitled to find both non-resident freelance pilots and resident freelance pilots liable to PAYE.”

182. Accordingly, the Respondent did not err in confirming the PAYE assessment against the Appellant.

Final Decision 183. Flowing from the above analysis, the Tribunal finds that the Appeal lacks merit and accordingly proceeds to make the following Orders: -a.The Appeal be and is hereby dismissed.b.The Respondent’s objection decision dated 16th June 2023 be and is hereby upheld.c)Each Party is to bear its own costs.

DATED AND DELIVERED AT NAIROBI THIS 28TH DAY OF JUNE, 2024ERIC NYONGESA WAFULA - CHAIRMANCYNTHIA B. MAYAKA- MEMBERDR. RODNEY O. OLUOCH- MEMBERTIMOTHY B. VIKIRU- MEMBERABRAHAM K. KIPROTICH- MEMBER