How irrigation project landed contractor in Sh1.3bn tax fight
A government irrigation project in Tana River County, Kenya, has led to a Sh1.38 billion tax dispute between Jilk Construction Company and the Kenya Revenue Authority (KRA). Jilk argues that the Bura Irrigation and Settlement Scheme Rehabilitation Project, which it took over from another contractor, was zero-rated for VAT, and the National Irrigation Authority wrongly withheld tax.
Why it matters
This case highlights the complexities of tax regulations and government contracts in Kenya, potentially impacting future infrastructure projects and the financial liabilities of contractors. It also sheds light on the operational challenges and legal disputes within large-scale public works.
A government irrigation project in Tana River County has become central to a Sh1.38 billion tax battle between a contractor- Jilk Construction Company and the Kenya Revenue Authority (KRA).
At the centre of the dispute is the Bura Irrigation and Settlement Scheme Rehabilitation Project, a government contract that Jilk took over from Afrikon Limited.
Afrikon had been awarded the contract in June 2019 for sheet piling and associated works but could not complete the contract, leading to its assignment to Jilk.
The project accounted for Sh649.6 million of the wider dispute pitting Jilk against KRA, with the company arguing that the project was zero-rated when it took over the contract and that the client – National Irrigation Authority -had wrongly withheld VAT.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in