M-Pesa Foundation Charitable Trust v Commissioner of Domestic Taxes (Appeal E433 of 2024) [2024] KETAT 1300 (KLR) (30 August 2024) (Judgment)
M-Pesa Foundation Charitable Trust v Commissioner of Domestic Taxes (Appeal E433 of 2024) [2024] KETAT 1300 (KLR) (30 August 2024) (Judgment)
The Appellant is a charitable trust founded and funded by M-PESA Holding Company Limited as part of its contribution to the welfare of the The Appellant’s activities are geared towards the relief of poverty and distress of the public and furtherance of education. To this end, the entity has obtained an income tax exemption from the Respondent.
The dispute herein arose when the Appellant who having entered into an arrangement with Safaricom, was assessed by the Respondent for withholding taxes on the re-charge costs or reimbursement it was paying to Safaricom on the basis that the same were payments for management and professional services.
The finding of the Tribunal is that the consideration or payment made to Safaricom was management and professional fees since Safaricom, as the Appellant had indicated in paragraph 8 of its submissions, was providing employment services to it. The payment was as made as consideration for a service which was the supply of employees on secondment. There was no mark-up but the fact remains that a payment was made in exchange for the service.
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