M-KOPA Holdings, a fintech company known for its pay-as-you-go solar systems, smartphones, and electric bikes, has been hit with a $6.8 million tax bill by the Kenya Revenue Authority (KRA) after a Tax Appeals Tribunal ruled against the company’s claim of foreign tax residency. M-KOPA argued that, as it’s incorporated in the UK and its operations are managed from there, it should not be liable for Kenyan taxes under the Kenya-UK Double Taxation Treaty (DTT).
The company asserted that most of its directors, including key figures like the CEO, CFO, and CCO, were based outside Kenya, and that key management decisions were made abroad. However, the tribunal found that despite M-KOPA’s incorporation in the UK, the critical operational and financial decisions were made in Kenya, leading them to declare the company a tax resident in Kenya.
This ruling is significant not only for M-KOPA but also for the broader business community in Kenya, as it establishes a precedent that companies cannot avoid local taxes by claiming foreign tax residency if their key decisions are made domestically. The Tribunal’s decision underscores that physical location and decision-making processes matter more than a company’s official place of incorporation when determining…