M-Kopa Ordered to Pay Sh885 million in taxes in ruling by KRA Tax Appeals Tribunal

M-Kopa, a well-funded fintech organization in Kenya, has been directed to pay Sh885.87 million in taxes by the Tax Appeals Tribunal
The tribunal ruled that M-Kopa's effective management operations were based in Kenya, not the United Kingdom, as claimed by the company
The company, founded in 2011, offers diverse products and services

In a significant ruling by the Tax Appeals Tribunal, fintech giant M-Kopa has been directed to pay Sh885.87 million in taxes.

This decision emerged after M-Kopa was unable to substantiate its claim that its effective management operations were based in the United Kingdom, contradicting its stance to the Kenya Revenue Authority (KRA).

"The tribunal set aside the withholding tax assessments for the years 2017 to 2019 and on deemed interest, based on the lack of evidence presented by M-Kopa regarding the board’s decision-making process," reported Business Daily.

The tribunal found that the company’s key management decisions are made in Kenya because its CEO, CFO, and CCO are Kenyan residents.

M-KOPA Customer and Agent BI Africa

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M-KOPA's defense

M-Kopa in its defense had argued that its tax jurisdiction should be considered outside of Kenya since its board of directors resides in multiple countries.

Additionally, M-Kopa contested the tax assessments related to deemed interest on redeemable preference shares, stating, these should not be taxed as they did not qualify as loans under the Income Tax Act.

Founded in 2011, M-Kopa has grown to become one of the most well-funded fintech organisations in Kenya, raising over $245 million in equity funding.

The company began by retailing solar-powered electrical equipment on a pay-as-you-go basis and has since diversified its offerings.

This includes health insurance and credit facilities for smart phones and electric motorcycles, boasting a customer base exceeding 3 million across Kenya, Nigeria, Uganda, and Ghana.

An M-kopa battery ece-auto-gen

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M-Kopa's innovative financing model combines digital micropayments with Internet-of-Things (IoT) technology, allowing underbanked customers to acquire a variety of products without the need for collateral.