Lessons from Mirova (Kenya) Ltd v Commissioner of Domestic Taxes (Tax Appeal No. E352 of 2026) [2026] KETAT 510 (KLR)
Introduction
Refund timelines under the Tax Procedures Act bind the Commissioner as firmly as filing deadlines bind the taxpayer. Miss them, and the refund is approved by law.
The Tribunal allowed the appeal, set aside the VAT Claim Rejection Order of 10th February 2026 and directed the Commissioner to refund KShs. 3,575,736.00 within ninety days. Once the 120-day audit window lapsed, the claim stood approved, and the Commissioner had no power left to reject it.
What Happened
Mirova (Kenya) Ltd, an investment adviser licensed by the Capital Markets Authority, advises Mirova S.A. (France) and Mirova Africa Inc. (USA) for a fee of cost plus a 12% mark-up. Its services are exported and zero-rated. On 10th June 2025 it lodged a refund claim of KShs. 3,575,736 for excess input VAT for June 2024 to May 2025 under Section 17(5) of the VAT Act.
On 20th June 2025 the Commissioner said the claim had been forwarded for audit, and on 4th August 2025 issued a Notice of Intention to Audit. Document requests followed until January 2026, and Mirova met each one. The claim was rejected in full on 10th February 2026.
The Commissioner’s argument was twofold. On the merits, Mirova was in substance an agent of its foreign principals, which reimbursed its entire cost base, so under Cofftea Agencies it could not claim the input VAT. On timing, the 120-day clock started only when the substantive desk audit began in December 2025, so the rejection was in time.
The company’s answer was that the refund had already been deemed approved under Section 47(4A) of the TPA. In any event, its contracts expressly made it an independent contractor with no power to bind its customers. A cost-plus fee is a pricing mechanism, not agency, and even a true agent keeps its statutory right to input tax.
What the Tribunal Decided and Why
The clock starts when KRA decides to audit, not when the audit gets going
Under Section 47(4A) of the TPA, an audited refund claim must be determined within 120 days. The Commissioner put the claim under audit on 20th June 2025, so the deadline was 18th October 2025. Even counting from the Notice of Intention to Audit of 4th August 2025, time ran out on 2nd December 2025. On either count, the February 2026 rejection was late.
Once time lapses, the Commissioner loses jurisdiction
Guided by Commissioner of Domestic Taxes v Royal Floraholland Kenya Limited, and repeating its words in Associated Battery Manufacturers, the Tribunal held that “once the statutory timelines lapsed without a valid determination, the law itself deemed the application approved, and the Respondent lost jurisdiction to reject it thereafter.”
A complex claim does not buy extra time
The Commissioner urged a purposive reading of “subjected to an audit” for complex transfer pricing claims. Relying on Commissioner of Domestic Taxes v Unga Limited, the Tribunal declined, holding that there is “no room for intendment or adopting a purposive approach when the words of the statute are clear and unambiguous.”
The agency question was left for another day
With the refund deemed approved, the Tribunal held that the remaining issues, including whether Mirova was an agent, were moot. The appeal was allowed, and each party bore its own costs.
Key Take-Homes for Stakeholders
To you Exporters of services and other zero-rated suppliers
Calendar the Commissioner’s deadline the day you file: 90 days from the application, or 120 days once the claim is subjected to audit. Keep the iTax acknowledgment slip and the letter referring your claim for audit, since those dates decide the outcome.
To you Subsidiaries of multinational groups on cost-plus arrangements
The Commissioner relied on Cofftea to deny input VAT because the foreign parent reimbursed the cost base, and that argument remains untested. Mirova won on timing, not on agency. Make sure your service agreements state clearly that you act as an independent contractor, and keep supplier invoices in your own name.
To you Finance and tax teams managing refund audits
Keep cooperating, but later document requests did not move the deadline. Mirova was still supplying records in January 2026 and still won. Note the statutory deadline in your correspondence and expressly reserve your right to rely on deemed approval.
To you Advocates and tax agents
Lead with deemed approval where the dates support it. One procedural ground disposed of this appeal without a ruling on the merits. Compute the 120 days from every possible trigger date, as the Tribunal did, so the argument holds whichever date is adopted.
Disclaimer: This post is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in this article should be assumed without seeking specific legal advice on the subject matter. If you have any query regarding the same, please do not hesitate to contact our Tax Law and Consulting Department; TaxLaw@wamaeallen.com .
About the author
Caxstone specializes in civil, employment and labour disputes, constitutional law, family law and succession, and environment and land matters. He has amassed a wealth of knowledge and experience in litigation which is evident in the successes obtained for clients. He is an active member of the Employment and Labour Relations Court Bar-Bench committee.
Denis Mutugi specializes in Commercial Litigation and Alternative Dispute Resolution.
Denis graduated with a Bachelor of Laws, LLB (Hons) from The University of Nairobi in 2021 and was admitted to the Roll of Advocates of the High Court of Kenya in the year 2023.
Denis has amassed a considerable wealth of experience in conducting legal research on various complex legal matters touching on Commercial, Insurance, Employment and Insolvency law and bankruptcy.
