(NAIROBI, KENYA) – The Tax Appeals Tribunal has cancelled a KES 780 million tax bill against Bboxx Capital Kenya. The tribunal ruled that the Kenya Revenue Authority failed to prove how it arrived at the disputed tax assessment.
The amount is equal to about 4.8 million US dollars or 3.8 million British pounds. The tribunal did agree with the tax authority that Bboxx customers were not simply renting solar equipment. The company’s pay as you go business model was subject to income tax on the resulting business income.
The tribunal found that customers were paying for solar systems in instalments with the aim of owning them after completing the agreed payments. This made the transactions hire purchase deals rather than leases.
The tax dispute began after the revenue authority treated KES 1.53 billion in the company’s lease stock as under declared credit sales. The authority applied a 30 percent margin and added back a KES 33.7 million hire purchase asset write off. The lease stock amount is equal to about 9.4 million US dollars or 7.4 million British pounds. The write off is equal to about 208,000 US dollars or 164,000 British pounds.
Bboxx sells solar panels, lamps, batteries and related equipment through payment plans. Its audited accounts described the sales as cash and hire purchase transactions.
The revenue authority began auditing Bboxx tax affairs for 2018 to 2022 in November 2023. It later assessed KES 780 million in corporation tax for 2019. This comprised KES 450.9 million in principal tax and KES 329 million in interest. The principal tax is equal to about 2.8 million US dollars or 2.2 million British pounds. The interest is equal to about 2 million US dollars or 1.6 million British pounds.
Bboxx objected but the revenue authority rejected the objection in September 2025. This led to an appeal at the tribunal. The company argued that ownership of the solar equipment stayed with Bboxx while customers bore risks after receiving the systems.
Bboxx said its 2019 accounts recognised KES 23.5 million in upfront sales and KES 598 million in lease revenue. The company said this money had already been taxed. The upfront sales amount is equal to about 145,000 US dollars or 114,000 British pounds. The lease revenue is equal to about 3.7 million US dollars or 2.9 million British pounds.
The tribunal rejected Bboxx classification argument. It found that the contracts with customers contained a purchase price, down payment and final payment. Ownership was addressed after completion of payments. A contract where the customer pays a deposit and instalments towards an agreed purchase price was made with the aim of transferring ownership.
Even though Bboxx kept ownership of the solar systems while customers were still paying, the tribunal said this alone did not make the arrangements leases. The contracts referred to a purchase price, down payment and final payment. Customers were not required to return the equipment after completing payments.
The tribunal also relied on Bboxx accounts, which stated that it had no finance leases and described the transactions as hire purchase. The tribunal rejected the revenue authority’s calculation of the alleged under declared income. The 30 percent margin had not been explained in the assessment, objection decision or submissions.
The tribunal said an unexplained figure is the opposite of judgement exercised upon available information. It set aside the revenue authority’s decision. The tribunal found that the authority had applied the deemed sales on top of KES 621 million in revenue that the company had already declared and paid tax on. This is equal to about 3.8 million US dollars or 3 million British pounds. The authority had not shown how much lease stock represented goods actually supplied during 2019.
Bboxx presented reconciliations, ledgers and movement schedules showing how lease stock was recognised as revenue. The revenue authority did not rebut that evidence. The tribunal held that the KES 1.53 billion adjustments were arbitrary and without a demonstrated factual foundation. The tribunal dismissed both the estimation of the year’s income and the decision to add back the written off assets.
The tribunal also rejected the KES 33.7 million asset write off adjustment. The assets had historical cost and accumulated depreciation of the same amount, leaving them with nil book value. Removing fully depreciated assets from Bboxx register created neither a gain nor loss. The authority identified no deduction requiring an add back.
The Bboxx case is not the first time the tax authority has used a margin to determine a taxpayer’s income. In August 2024, the authority imposed a KES 32.9 million tax bill plus interest and penalties on petroleum distributor Koriyo Horse Investments Limited. This is equal to about 203,000 US dollars or 160,000 British pounds.
The authority applied a 5 percent markup on the company’s cost of sales. In that case, decided in October 2025, the tribunal held that estimation using markups and cost of sales is only allowed when adequate records are not kept or produced by the taxpayer. In another similar case decided in September 2024, the tribunal sided with the taxpayer. It stated that even without records, an estimate must be backed by concrete facts and verifiable economic models.