The Tribunal was tasked with determining whether commissions earned by Bid Management Consultancy Limited (BMCL) from its role in facilitating the relationship between investors and AIB Capital were subject to Value Added Tax (VAT).

Background of the Case

Bid Management Consultancy Limited (BMCL) is a private limited company registered in Kenya. BMCL operates in the financial sector, specifically in dealing with stocks, shares, investment clubs, and brokerage activities. BMCL’s primary role involves sourcing clients for stockbrokers and facilitating client relationships. The company does not directly engage in trading shares or managing investments on behalf of clients but plays a vital intermediary role by introducing investors to stockbrokers.

In 2021, the Kenya Revenue Authority (KRA) reviewed BMCL’s tax returns and issued a notice of audit on July 29, 2021. Following the audit, KRA issued an assessment on September 23, 2021, for the period covering December 2017 to December 2019, which included additional assessments on BMCL’s iTax portal on March 4, 2021. KRA’s assessment was based on the premise that the commissions BMCL earned from its client sourcing activities were subject to VAT, as they were deemed to be taxable supplies under the Value Added Tax Act (VATA).