RSMEA Tax Alert – High Court Rules that VAT Applies to Entire Fee in Staff Outsourcing Deals

Introduction

On 23rd May 2025, the High Court of Kenya delivered a judgment in Income Tax Appeal No. E228 of 2023 – Commissioner of Domestic Taxes vs Techsavana Company Limited, overturning the Tax Appeals Tribunal (TAT’s) earlier decision on the same. The Court held that the provision of outsourced developers by Techsavana constituted a taxable supply of services subject to Value Added Tax (VAT). The decision affirms that where a taxpayer retains contractual responsibility and control over remuneration, it cannot claim the role of a mere facilitator or agent and the full invoice amount is subject to VAT.
 

Caveat

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