A hardware wholesaler in Embu County is now set to pay the Kenya Revenue Authority up to Sh. 9.3 billion in taxes. This is after the wholesaler lost a case challenging the tax demand at the Tax Appeals Tribunal.

According to a report that appeared in the Business Daily on Thursday, the wholesale business is known as Paleah Stores Ltd and is operated by a man and his wife in Embu. It deals in building materials including sand, cement, iron sheets as well as food products including sugar and rice.

The report said that Paleah lost the tax battle after a five-member Tax Appeals Tribunal ruled that KRA’s demand was not excessive. “From the foregoing, the tribunal is of the considered view that the respondent (KRA) did not err in law and fact by issuing additional income tax assessments on the appellant (Paleah) for the years of income 2008 to 2014,” the Tax Appeals Tribunal said.

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During the hearings, the taxman said that he got a tip off that the wholesaler was evading taxes. After investigations, the taxman found out that the wholesaler had evaded taxes amounting to billions of shillings between 2008 and 2014. The KRA then proceeded to issue a tax demand amounting to Sh. 1.3 billion for corporation tax and Sh. 7.89 billion for VAT, plus interest and penalties.

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Paleah however disputed these figures, and argued that the tax due to KRA amounted to Sh. 34.8 million only. The trader also told the tribunal that KRA did not consider its Sh. 1.58 billion operating expenses. Paleah also argued that KRA refused to accept its gross profit rates based on sample actual invoices it provided. In response, KRA said that it had used information sourced from the trader’s bankers and suppliers to carry out its tax assessment.

KRA said that bank and supplier details had revealed a major mismatch of stocks inventories, tax declarations and bank transactions.