Google Kenya is seeking to have the Kenya Revenue Authority compelled to pay tax refunds of Sh58.7 million, in a case of the hunter becoming the hunted.
In a suit that foreign firms with subsidiaries in Kenya will closely monitor, Google Kenya has asked the High Court to overturn a Tax Appeals Tribunal decision that barred it from demanding refunds for Value Added Tax paid between 2010 and 2013.
Google Kenya is a subsidiary of the technology giant, which was specifically incorporated to offer marketing services on behalf of its parent companies based in the US and Ireland.
The High Court has now been tasked with deciding whether the marketing services offered by Google Kenya were consumed locally or in the US and Ireland, and whether the taxman will have to release the Sh58 million refunds.
Google Kenya insists that it is a separate legal entity from Google Ireland and Google LLC in the US. The firm adds that Google Ireland and Google LLC contracted it to perform research and development for them.
As a result, Google Kenya holds that the results of its functions are consumed in the US and Ireland, hence were not subject to the VAT paid between 2010 and 2013.
The KRA has not responded to the High Court case.
But at the tribunal, the taxman argued that Google Kenya’s services are consumed locally by audiences who view advertisements and other products released by the company.