Kenya High Court orders KRA to refund US$0.16M to animal feed firm

KENYA – In a significant win for Kenya’s animal feed sector, the High Court has ordered the Kenya Revenue Authority (KRA) to refund Sh21 million (approximately US$162,162) to Animix Limited, ruling that the authority’s decision to reclassify the company’s imported animal-feed products for VAT purposes was unlawful.

According to a report by Business Daily, the judgment, delivered this week by Justice Charles Kariuki, upheld an earlier decision by the Tax Appeals Tribunal, declaring KRA’s VAT reassessment of Sh143 million (approximately US$1.1 million) against Animix as lacking both legal and evidentiary basis.

According to Justice Kariuki, the authority failed to provide any legal justification or supporting evidence for classifying the goods as general-rated.

Unilateral VAT reassessment quashed

The dispute arose from a January 5, 2023, objection decision by KRA, which upheld earlier audit results and imposed taxes, interest, and penalties on Animix for the period between August 2018 and July 2020. Animix challenged the decision before the Tax Appeals Tribunal, which ruled in the company’s favour.

Despite the tribunal’s decision, KRA’s Commissioner of Customs and Border Control rejected Animix’s claim for a VAT refund, offering no substantial reasoning.

This was despite the company presenting comprehensive documentation, including zero-rated sales invoices, export declarations, payment records, and buyer confirmations.

Justice Kariuki found that KRA “failed to provide any legal justification or supporting evidence for classifying the goods as general-rated.” 

He further ruled that the authority’s unilateral reassessment violated both the Fair Administrative Action Act, 2015, and the constitutional guarantee of fair administrative action under Article 47.

Zero-rated feed inputs protected

Under Kenyan tax law, raw materials imported for animal feed manufacturing are considered taxable supplies but are subject to a 0% VAT rate. This exemption is aimed at reducing feed costs and encouraging investment in the animal nutrition industry.

Animix Limited, a local manufacturer of feed additives, premixes, veterinary medicines, and acaricides, works with global partners to deliver high-quality solutions for animal health and productivity across the region.

“We partner with reputable international companies that guarantee safety, efficacy, quality, reliability and performance of their products all the time,” Animix states on its website.

This court victory is likely to set a precedent for similar disputes in the animal feed industry, which has been under scrutiny following recent competition and market inquiries.

It also reaffirms the judiciary’s role in ensuring fair tax administration and protecting investor confidence in Kenya’s agricultural value chains.

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