A Nairobi High Court has allowed Kenya Revenue Authority to collect withholding Taxes from shipping lines on container demurrage charges. The Withholding Tax from different shipping lines amounts to over KShs.2 billion.
Justice Francis Tuiyott of Milimani Court’s Commercial and Admiralty Division, ruled in favour of KRA in the judgement of a consolidated tax appeal case filed by seven shipping lines operating in Kenya protesting taxation of income on demurrage charges.
The shipping lines wanted the court to make a finding that demurrage charges are not subject to tax in Kenya.
KRA on the other hand held the view that demurrage charges do not form part of freight levied by shipping lines as demurrage could only be accrued after the goods have been cleared through Customs and have entered the country.
In his determination, Justice Tuiyott held that freight comes to an end at the port of landing and any demurrage imposed on container for late return after port clearance is a post importation charge.
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