(NAIROBI, KENYA) – A Kenyan court has ordered the revenue authority to deliver a final ruling within 60 days on a tax dispute involving Geo Chem Middle East, a Dubai based firm contesting a KES 1 billion demand.
The Court of Appeal issued the directive after dismissing Geo Chem’s latest challenge against the assessment. The court instructed the Kenya Revenue Authority (KRA) to make a substantive decision on the company’s tax objection within the two month period.
The tax bill, valued at KES 1 billion ($6.9 million / £5.4 million), stems from a petroleum products inspection and testing contract that was suspended in 2010. KRA issued the assessment for corporation tax and Value Added Tax (VAT) in 2021. This followed an arbitration tribunal award of KES 1.9 billion ($13.1 million / £10.3 million) to Geo Chem for unpaid fees and lost income. The company maintains it never received the award proceeds.
The dispute originates from a 2009 agreement in which the Kenya Bureau of Standards (Kebs) contracted Geo Chem to inspect and test imported petroleum products at the Port of Mombasa for quality and quantity.
The contract was set for three years, renewable for another three. Geo Chem was responsible for issuing quality and quantity certificates used to determine taxes on petroleum imports. Its fees were initially 0.6% of the cost, insurance and freight value of imported products, with 0.2% payable to Kebs as royalties.
The arrangement lasted seven months before the government suspended it in March 2010. Oil marketers had difficulty paying the inspection fees, so KRA was brought in to collect the money and remit it to Kebs.
KRA later reported holding KES 344.4 million ($2.4 million / £1.9 million) collected under the arrangement. Geo Chem said it was entitled to approximately KES 296.9 million ($2 million / £1.6 million) as its share. The company states it never received this money.
The contractual dispute moved to arbitration after Kebs confirmed termination of the contract. On 29th July, 2016, the tribunal awarded Geo Chem $15.4 million (KES 1.9 billion), comprising $3.68 million for unpaid invoices, inclusive of interest and VAT, and $11.71 million for loss of income, also inclusive of interest and VAT. The tribunal also awarded Kebs KES 87 million ($600,000 / £470,000) on its counterclaim for royalties.
The award went through several court proceedings. The High Court rejected Kebs’s attempt to set it aside in 2017, but the Court of Appeal overturned that decision in 2019. The Supreme Court reversed the Court of Appeal ruling in December 2020, restoring the High Court decision that recognised the award.
The Supreme Court noted that Geo Chem had established a petroleum inspection facility at the Port of Mombasa and had not received payments from marketers.
The tax dispute arose after KRA issued Geo Chem an assessment dated 7th April, 2021, demanding KES 1 billion in corporation tax, VAT and interest.
Geo Chem objected on 28th April, but KRA declared the objection invalid two days later, stating it lacked documents required under the Tax Procedures Act.
The Tax Appeals Tribunal later found the objection valid and ordered KRA to consider it. The High Court upheld that decision in June 2024, leading to Geo Chem’s appeal.
Geo Chem argued that the tax should be cancelled because it had not received the income, the assessment was based on an arbitral award, and the claim fell outside the statutory five year period. It also argued that KRA had retained money due to the company and should first credit KES 256.4 million ($1.8 million / £1.4 million) before demanding further tax.
The company said its objection should be treated as allowed because KRA had not made a substantive decision within 60 days.
The Court of Appeal rejected that argument. In the judgment dated 31st July, 2026, the judges said the 60 day period applies to a substantive objection decision, not a dispute over whether the objection was validly lodged. The judges held that where a KRA validity decision is challenged and overturned, the 60 day period begins after the dispute is finally determined.
“The only reasonable conclusion,” the court said, was that the clock starts after the validity dispute is resolved.
The court said the law sets out two separate steps when a taxpayer challenges a KRA tax assessment.