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Sergon v Commissioner of Domestic Taxes (Tax Appeal E248 of 2024) [2025] KETAT 217 (KLR) (Civ) (25 April 2025) (Judgment)

Sergon v Commissioner of Domestic Taxes (Tax Appeal E248 of 2024) [2025] KETAT 217 (KLR) (Civ) (25 April 2025) (Judgment)
Citation
Sergon v Commissioner of Domestic Taxes [2025] KETAT 217 (KLR)
Media Neutral Citation
[2025] KETAT 217 (KLR)
Court
Tax Appeal Tribunal
Outcome
Allowed
Case number
Tax Appeal E248 of 2024
Judges
CA Muga, BK Terer, EN Njeru, E Ng'ang'a, SS Ololchike
Judgment date
25 April 2025
Language
English
Type
Judgment
Original source file
Download DOCX (96.2 KB)
Collections
Date published
08 May 2025
Case action
Judgment
Court division
Civil
Filing county
Nairobi
Order
a.The Assessment issued and confirmed is hereby referred back to the Respondent for appropriate re-assessment and expunging of the Appellant’s employment income from the assessment subject to the provision of documentation in form of pay-slips by the Appellant in respect to the years under review. b.The appropriate re-assessment for the other sources of the Appellant’s income for the years under review subject also to the provision of any other documents the Respondent may require. c.The Appellant to provide documents arising from these orders within 30 days of this judgement and the Respondent to issue its objection decision within 60 days of receipt of all the documents provided by the Appellant. d.Each party to bear its own cost.
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Background
1.The Appellant is a male Kenyan citizen and an employee of the World Health Organisation (hereinafter “WHO”).
2.The Respondent is a principal officer appointed under Section 13 of the Kenya Revenue Authority Act, CAP 469 of Kenya’s Laws (hereinafter “the Act”). Under Section 5 (1) of the Act, the Kenya Revenue Authority is an agency of the Government for the collection and receipt of all tax revenue. Further, under Section 5(2) of the Act with respect to the performance of its functions under subsection (1), the Authority is mandated to administer and enforce all provisions of the written laws as set out in Part 1 and 2 of the First Schedule to the Act for the purposes of assessing, collecting and accounting for all revenues in accordance with those laws.
3.The Respondent, in a bid to establish whether taxes were paid on the funds utilised by the Appellant in acquiring property carried out a verification process of the records of the Appellant for accuracy of income declarations for the periods between January 2018 to December, 2021.
4.On 30th September, 2022 the Respondent issued a notice pursuant to section 59 of the Tax Procedures Act, CAP 469B of the Laws of Kenya (hereinafter “TPA”) on 21st October, 2022, wherein the Appellant was sent a notice of intention to issue additional assessment pursuant to the provisions of Section 31 of the TPA. The Appellant responded by visiting the offices of the Respondent on 20th December, 2022.
5.On 14th June 2023, the Respondent issued the Appellant with assessments in respect of income tax for the 2018, 2019 and 2020 years of income in the sum of Kshs. 7,549,123.00; Kshs. 14,088,298.00, and Kshs. 18,161,759.00, respectively. On 15th June 2023, the Respondent issued an additional assessment of Kshs. 39,799,180.00 in respect of the 2018,2019 and 2020 years of income.
6.The Appellant objected to the assessment on 6th July 2023. The grounds of objection were premised on the fact that the Appellant's salary and emoluments from the WHO were legally exempted from taxes. The Respondent wrote to the Appellant vide an electronic mail on 17th July, 2023 and 9th September, 2023 requesting additional documents for review.
7.On 11th September 2023, the Respondent, confirmed the assessment of Kshs. 35,909,292.00. Aggrieved by the Respondent’s decision, the Appellant lodged his Notice of Appeal dated 28th February, 2024 on even date. The Appellant had been granted leave to file his Appeal out of time on 15th February, 2024.
8.The Appellant applied for review of the Judgment delivered on 24th January, 2025 pursuant to the provisions of Section 29(A) of the Tax Appeals Tribunal Act, CAP 469A of Kenya’s Laws (hereinafter “TATA”) and following directions of the Tribunal on 10th April, 2025 the Judgment delivered on 24th January, 2025 was set aside and the matter referred back for determination on its merits which determination the Tribunal will proceed to render herein.
The Appeal
9.The Appeal was premised on the following grounds as outlined in his memorandum of appeal dated and filed on 28th February, 2024, leave having been granted by the Tribunal on 15th February, 2024 to file the Appeal out of time:i.That the Respondent misapprehended the law in raising the entire assessment as the Appellant's income, earned from WHO is expressly exempt from taxes.ii.That the entire assessment is a violation of the provisions of the Convention on Privileges and Immunities of the United Nations 1946( hereinafter “ the International Convention”) which Kenya acceded to in 1965.iii.That additionally, the Assessment is in violation of provisions of the Privileges and Immunities Act, CAP 179 Laws of Kenya (hereinafter “Privileges Act” ) which give effect to the International Convention.ivThat the Respondent's objection decision is unreasonable and contrary to Section 59 of the TPA and in violation of the Appellant's legitimate expectation created under Article 47 of the Constitution of Kenya, 2010 (hereinafter “the Constitution”).vThat without prejudice to the above, if indeed there was a tax payable on the Appellant's income, as per Section 37 of the Income Tax Act, CAP 470 of the Laws of Kenya (hereinafter “ITA”) the Respondent cannot place that obligation on the Appellant.vi.That the above had been judicially decided upon by the Tribunal in the case of Stefanutti Stocks Kenya Limited v Commissioner of Domestic Taxes where it was held that Pay as You Earn (PAYE) remittance is not an obligation of the employee, but the employer.vii.That by dint of Article 210 of the Constitution the entire assessment was erroneous as the Respondent failed to give regard to clear legal provisions and failed to take into account of the relevant considerations, materials, information and documentation to prove that indeed, the Appellant's income enjoys tax exemption.
Appellant’s Case
10.The Appellant’s case was premised on his statement of facts dated and filed on 28th February, 2024 for which he had obtained leave to file out of time from the Tribunal; his supplementary statement of facts which the Tribunal granted him leave to file by its Ruling on 19th July, 2024 and his testimony which was admitted as evidence in chief by the Tribunal on 13th November, 2024.
11.The Appellant stated that it was not in dispute that he was employed by WHO during the assessed periods and that the above position was been confirmed by the Respondent's objection decision where it is expressly stated the following:“we made the following findings upon review of your objection and evidence adduced...”“(H) The letter you shared confirmed that you have been an employee of WHO since 2009. The appointment contract is scheduled to end on 31st December 2040.”
12.The Appellant noted that WHO is an Agency of the United Nations and that therefore it is subject to the following provisions of Article V Section 18 (b) of the International Convention on the Privileges and Immunities of the United Nations, 1946 [hereinafter “International Convention”]on the immunity of the United Nations:“(b)be immune from taxation on the salaries and emoluments paid to them by the United Nations”
13.The Appellant averred that Section 35 of the International Convention provides as follows:“This convention shall continue in force as between the United Nations and every member which has deposited an instrument of accession for so long as that Member remains a Member of the United Nations, or until a revised general convention has been approved by the General Assembly and that Member has become a party to this revised convention”
14.The Appellant was of the view that Kenya acceded to the International Convention above in 1965, and thus, by virtue of Article 2(5) of the Constitution, the International Convention is part of our domestic laws.
15.The Appellant averred that in light of the above legal provisions, the Respondent has no legal justification to impose taxes on the Appellant's income. That without prejudice to the above, the obligation to remit tax on salary, PAYE, the following provisions of Section 37 (1) of the ITA falls squarely on the Appellant's employer:“(1)An employer paying emoluments to an employee shall deduct therefrom, and account for tax thereon, to such extent and in such manner as may be prescribed."
16.In addition to the above, the Appellant averred that the Respondent was on a fishing expedition and relied on reasons, without any legal backing, to raise a bloated assessment against the Appellant and that in support of the above, the Appellant brings to light, one of the following reasons given by the Respondent in raising a Kshs. 35,000,000.00 assessment:“the review of the appointment letter would not demonstrate on whether your recruitment was through a competitive process…”
17.The Appellant stated that the finding by the Respondent as outlined in paragraph 15 above was contrary to the Respondent's conclusion that the Appellant is employed by WHO. Moreover, it was unclear what the tax implications are for the Appellant not being hired through a competitive process.
18.The Tribunal will not rehash the supplementary statement of facts through which the Appellant introduced additional documents. However, the Appellant stated that without prejudice to its previous statement, he attached evidence that the source of his income was from salaries and emoluments payable by WHO.
19.In his witness statement the Appellant testified that he is employed by WHO and that his source of income is from salaries and emoluments paid by WHO. ​ He further testified that he is tax exempt based on several laws and agreements, including the Vienna Convention on Diplomatic Relations, the Host Country Agreement between the UN and Kenya, and the Privileges Act and that he was not locally recruited as his employment letter was dispatched from Harare, Zimbabwe.
20.The Appellant in his testimony cited specific sections of the Headquarters Agreement and other legal instruments that exempt UN officials from taxation on their salaries and emoluments and testified that in his view his employer was responsible for deducting and remitting any tax payable. The Appellant also provided bank statements to dispel allegations of undeclared income and asserted that his income is not taxable and that any tax demands made through him are irregular. ​
21.The Appellant made the following prayers to the Tribunal:a.That the Appeal be allowed.b.That the Respondent’s decision be set aside vacated and /or quashed.c.That the Costs of the Appeal be provided for.
Respondent’s Case
22.The Respondent replied to the Appeal through its Statement of Facts dated and filed on 28th March, 2024 in addition to its Supplementary statement of facts dated and filed on 21st August, 2024.
23.The Respondent stated that through electronic mail correspondence dated 17th July, 2023 and 9th September, 2023 it requested the following documents from the Appellant for review:
  • Bank Statements for the period January 2018 to December, 2022.
  • Evidence of payments of the property and copies of ownership documents.
  • Purchase agreements.
  • Loan Agreement.
24.The Respondent stated that the Appellant upon lodging his objection notice did not attach the requisite documents as requested but instead opted to provide the following documents:
  • Attestation letter dated 23rd January, 2023 to confirm that he is an employee of WHO.
  • Circular from the ministry of Foreign Affairs to all diplomatic missions and international organisations.
  • Appointment letter.
  • HR system generated personal details.
25.The Respondent stated that at the center of its decision was its rejection of the objection notice and upholding the assessment on the basis that the Appellant failed to avail the documentation requested in support of the objection notice they provided.
26.It was the Respondent's case that upon receiving the Appellant's objection it requested the Appellant to avail documents supporting its grounds of objection but its request ‘fell on deaf ears’.
27.The Respondent stated that it was the Appellant’s claim that the income used to acquire the property referenced in the assessments were funds earned from employment as a UN staff member and previous earnings accrued over the last three decades and that the funds were thus exempt from taxation.
28.The Respondent averred that the issue at hand was not focused on whether the Appellant is an official employee of the UN or whether his income is tax exempt, but rather to verify that indeed the income source that was used to purchase the parcels of land was from the employer Who.
29.The Respondent stated that the Appellant was attempting to escape his tax obligations by masking himself behind the thick cloak of his employer and reiterated that it was not in issue whether the Appellant’s income is tax exempt, or whether he enjoyed privileges and immunities under the International Convention to which Kenya is a party. The issue was whether the Appellant provided the required documents to show that indeed the properties he owns were purchased by income from his employer (United Nations) which is tax exempt. This was an issue according to the Respondent which could only be easily resolved by the provision of the requested documents.
30.The Respondent’s view was that Section 51 (3) of the TPA mandated the Appellant to support his objection with all relevant documents. The Respondent averred that it was undertaking a verification process on the accuracy of income declarations for the periods January 2018 to December 2021 and nothing would have made it easier to settle the issue at hand than for the Appellant to provide the requested documents which were in their possession to discharge their burden of proof.
31.The Respondent stated that the burden of proof that an assessment is excessive and/or erroneous lies with the Appellant. The Respondent also stated that pursuant to the provisions of Section 24(2) of the TPA it is not bound by the tax return or information provided by the Appellant and that it is empowered to assess any taxpayer based on information available to it. In this case, the ‘Respondent's eyebrows were raised’ by the fact that the Appellant filed NIL returns for the entire period under question despite having four property titles listed under his name. The existence of the Titles having been established using the stamp duty report.
32.The Respondent stated that section 31 of the TPA allows it to make additional assessment based on the information placed before it using its best judgment. The Respondent further averred that Section 56 (1) of the TPA places the burden on the Appellant to prove that a tax decision is incorrect and provides as follows:“In any proceedings under this Part, the burden shall be on the Appellant to prove that a tax decision is incorrect."
33.The Respondent also placed reliance on the following provisions of Section 59 of the TPA that empowers the Respondent to seek any information relating to the ascertaining of the correct tax liability of a taxpayer:“59.Production of records1.For the purposes of obtaining full information in respect of the tax liability of any person or class of persons, or for any other purposes relating to a tax law, the Commissioner or an authorised officer may require any person, by notice in writing, to-a.produce for examination, at such time and place as may be specified in the notice, any documents (including in electronic format) that are in the person's custody or under the person's control relating to the tax liability of any person;b.furnish information relating to the tax liability of any person in the manner and by the time as specified in the notice; orc.attend, at the time and place specified in the notice, for the purpose of giving evidence in respect of any matter or transaction appearing to be relevant to the tax liability of any person.”
34.The Respondent stated that in the absence of documents it was left with no option but to rely on information available to it. As such it was the Respondent's case that its decision was not flawed as stated by the Appellant.
35.In its supplementary Statement of Facts, the Respondent’s further replied by analysing a single issue that it had identified for determination namely:
Whether the Appellant’s income was exempt from Tax
36.The Respondent proceeded to analyse this issue for determination in its supplementary statement of facts by stating that the Appellant has an obligation to submit a tax return under Section 24(1) of the TPA. The Respondent further stated that despite receiving income from his employment with WHO, the Appellant filed nil returns. ​ The Respondent asserted that this income is taxable under Section 3(2)(a) of the ITA which which includes income from employment or services rendered. ​
37.The Respondent disputed the Appellant's claim for tax exemption under Paragraph 27 of the First Schedule, to the ITA stating that the Appellant did not demonstrate that his work qualifies for this exemption. The Respondent further stated that additionally, the Appellant did not provide evidence of any status under the PI that would exempt him from taxes. ​ Therefore, the Respondent maintained that the Appellant's income is taxable and the tax obligations were not met. ​
38.The Respondent prayed that the Appeal would be dismissed with costs.
Parties’ Written Submissions
39.The Appellant’s written submissions were dated and filed 27th November, 2024 as were those of the Respondent which were dated and filed on even date. Both parties complied with the Tribunal’s directions in this regard.
40.In his submissions the Appellant noted that since the Respondent did not cross examine him it was uncontroverted evidence that he has been gainfully employed by WHO since 2009 and has a fixed contract term until 31st December 2040. ​ Further, the Appellant submitted that his tax exemption status is informed by Article V, Section 18(b) of the International Convention and the General Assembly Resolution 76(1) of 1946.
41.The Appellant submitted that his evidence was uncontroverted that his tax exemption status is further confirmed by his employer’s conduct and implied actions, including communications from the UN Office of the Director General. The Appellant submitted further that since he was recruited in Harare, Zimbabwe, and has a fixed-term contract, this qualified him for a tax exemption status under the applicable provisions. ​In his submissions, the Appellant identified three issues for determination as outlined and analysed below:
Whether the Appellant qualifies for tax exemption.
42.The Appellant submitted that it was not in dispute that his employer is WHO but that what was contested was whether his employment fell under the category of ‘officials specified” to enjoy the tax exemption status under Article V, section 18 (b) of the International Convention. The Appellant submitted that the application of the legal provisions supporting the Appellant’s exemption status are anchored on the fact that Kenya acceded to WHO’s Constitution on 27th January 1964 and that by dint of Articles 2(5) and (6) of the Constitution, the provisions of the Vienna Convention and all other ratified treaties and agreements are domesticated under Section 4(1) and Article 31 of the First Schedule of the Privileges Act.
43.The Appellant submitted that Article V, Section 18 (b) of the International Convention, read together with Resolution 76(1) of 7th December 1946, confirms the criteria for officials to enjoy the tax exemption status. Resolution 76 (1) provides as follows:“The General AssemblyHaving considered the proposal by the Secretary- General that, in accordance with section 17 of Article V of the Convention on the privileges and Immunities of the United Nations, the categories of officials to which the provisions of Articles V and VII shall apply should include all members of the staff of the United Nations with the exception of those who are recruited locally and are assigned to hourly ratesApproves the granting of the privileges and immunities referred to in Article V and VII of the Convention of Privileges and Immunities of the United Nations, adopted by the General Assembly on the 13th February 1946, to all members of the staff of the United Nations, with the exception of those who are recruited locally and are assigned to hourly rates.Fiftieth plenary meeting 7 December 1946”
44.The Appellant also submitted that paragraph E, rule 11 of the Regulations to the PI provides for the Diplomatic Privileges (World Health Organization) Order, 1956, provides that employees of WHO may be exempt from paying certain taxes and duties in their official capacity, including exemptions from income tax on their salaries or on goods and services used for official purposes. The Appellant in analysing this issue for determination submitted that Section 11 (1) (c) of the Privileges Act which, when read together with paragraph E, rule 11 of the Regulations to the Privileges Act declares WHO to be an organization to which Section 11 of the Privileges Act applies.
45.The Appellant also analysed under this issue for determination, the applicable laws that supported his submission that he was an official. On the premise of the Law, the Appellant relied on on Section 13 of the ITA, which provides that the income accrued in or is derived from Kenya is exempt from tax to the specified extent. In this case, the specifications are provided for under Rule 27 of Part I of the First Schedule to the ITA, which provides as follows:“The emoluments payable out of foreign sources in respect of duties performed in Kenya in connection with technical assistance or other agreements for developmental services or purposes to which the Government or the community is a party to any non-resident person or to a person who is resident solely to perform those duties, in any case where the agreement provides for the exemption of such emoluments.”
46.The Appellant’s submission was that rule 27 to part 1 of the First Schedule to the ITA provides a definite criterion for determining which emoluments are exempt from taxes, which are as follows:a.The emoluments are paid out of a foreign source to a non-resident or to a person solely resident to perform those duties;b.The duties performed must be in connection to providing technical assistance or purpose to which government is a party; and,c.An agreement that provides for the exemption claimed.
47.In the instant case, the Agreement under paragraph 27 is the International Convention as read together with the United Nations General Assembly Resolution 76 (1) of 7th December 1946. The Appellant cited the case of Opiyo v Commissioner of Domestic Taxes (Appeal 889 of 2022) [2024]KETAT 607 EKLR which was distinguished from the instant appeal to the extent that the Appellant in the instant case had demonstrated that he met the criteria of a specified officer under the applicable provisions.
48.The Appellant in this matter submitted that he had clearly outlined the terms of employment and provided uncontroverted evidence that he was recruited in Harare, Zimbabwe, and has a fixed- term contract. As such, the Appellant was neither locally recruited nor assigned hourly rates and is therefore qualified as the ‘specified official’ to enjoy tax exemption status. Further, the Appellant relied on the Host Agreement, which provides for tax exemption under Article VIII, Article XIII Section 28 (d), (e) and (o), and Section 32. Article XIII Section 28 (d), (e) and (o), of the Host Agreement mirror the UN General Assembly’s resolution on privileges and immunities of the Staff of the UN and provides as follows:“Officials … shall enjoyd.Exemption from Taxation in respect of the salaries, emoluments, indemnities and pensions paid to them by the UNEP for services past or present or in connection with their service with UNEPe.Exemptions from any form of taxation on income derived by them from sources outside from the Republic of Kenya…(o)Officials … who are locally recruited shall enjoy only those privileges and immunities provided in the General Convention, it being understood, nevertheless, that such privileges and immunities include exemption from taxation on pensions paid to them... ”
49.These provisions the Appellant avowed are applicable to the WHO and its officials by virtue of Section 32 which provides as follows:“This Agreement shall apply, mutatis mutandis, to such other offices of the United Nations as may in future be set up with the consent of the Government of the Republic of Kenya”
50.The Appellant avowed that in effect, these provisions provide for exemption from direct taxes on official income and property belonging to employees of the UNEP (which invariably extends to all employees of the UN and its attendant agencies).The Appellant submitted therefore that the Host Agreement is still in force, valid, and binding on all the relevant parties, including the Respondent, as it has not been terminated or varied. As such, the Appellant submitted that he has demonstrated that he has met the criteria set in the Privileges Act.
51.The Appellant legitimately expected the communication by the Ministry of Foreign Affairs which confirmed without a doubt that the Appellant, as an employee of the WHO, enjoys tax-exempt status. The circulars were addressed to his employer.
Whether it was the Appellant’s obligation to deduct and remit PAYE. ​
52.The Appellant stated that the subject matter in this Appeal was his salary, which strictly falls under the provisions of section 37 of the ITA, which provides as follows:“(1)An employer paying emoluments to an employee shall deduct therefrom, and account for tax thereon, to such extent and in such manner as may be prescribed.(2)If an employer paying emoluments to an employee fails—a.to deduct tax thereon;b.to account for tax deducted thereon; orc.to supply the Commissioner with a certificate provided by rules prescribing the certificate,the Commissioner may impose a penalty equal to twenty-five percent of the amount of tax involved or ten thousand shillings whichever is greater, and the provisions of this Act relating to the collection and recovery of that tax shall also apply to the collection and recovery of the penalty as if it were tax due from the employer: Provided that, instead of the Commissioner imposing a penalty under this subsection, a prosecution may be instituted for an offence under section 109(1)(j).”
53.The Appellant submitted that the clear language of the statute on the holder of the tax obligation to remit the taxes on salaries, if any, informed the circulars by the Ministry of Foreign Affairs. These circulars are addressed to the Appellant’s employer. Through the circulars, it had been demonstrated that the Respondent with the Ministry of Foreign Affairs issued a circular to the organizations which have signed Host Country Agreements with the Government to facilitate the payment of income tax for their employees.
54.The Appellant submitted that in effect, the circular, read together with the Income Tax (P.A.Y.E) Rules at rules 4, 6, 9, 10, and 12, requires an employer, whether resident or non-resident, to deduct PAYE on the employee’s emoluments, notify the Respondent, and finally remit the tax within the specified period. Essentially, the Respondent was aware that by dint of the Law, accounting for employment income was within the ambit of the Appellant’s employee[sic] and as the procedure would dictate, any queries, concerns or communication regarding the same would be directed to or through the Appellant’s employer.
55.The Appellant submitted that any attempt to reassign this obligation was untenable in law. The court of Appeal in Civil Appeal No. 314 of 2017, Ian Edwards v Bytes Technology Group of Kenya [2018] eKLR, held as follows:“The Income Tax Act does not place responsibility or any obligation on an employee to deduct or remit tax to KRA. The Act places such responsibility on the employer … The respondent (employee) cannot claim ignorance of the law. The Respondent (employer) appears to shift responsibility bestowed upon it by law on the appellant (employee) for no apparent reason. This holding we have perforce arrived at is consistent with our decision in Erastus Mureithi v Co-operative Bank of Kenya [2017] eKLR on the location of that duty”
56.The Appellant submitted that it was evident that the obligation to remit tax falls with the Respondent. This obligation is so strong that it does not shift. Indeed, where there is a failure to remit, the burden does not shift to the employee, indeed, Section 37 (2) of the ITA provides as follows:“(2)If an employer paying emoluments to an employee fails—d.to deduct tax thereon;e.to account for tax deducted thereon; orf.to supply the Commissioner with a certificate provided by rules prescribing the certificate,‘the Commissioner may impose a penalty equal to twenty-five per cent of the amount of tax involved or ten thousand shillings whichever is greater, and the provisions of this Act relating to the collection and recovery of that tax shall also apply to the collection and recovery of the penalty as if it were tax due from the employer…”
57.The Appellant submitted that Section 37 (2) of the ITA further provides that should the Respondent wish to prefer criminal proceedings, the same still lies against the employer. Subsection 4 then provides as follows:“Any tax deducted under this section from the emoluments of an employee shall be deemed to have been paid by that employee and shall be set-off for the purposes of collection against tax charged on that employee in respect of those emoluments in any assessment for the year of income in which such emoluments are received.”
58.The Appellant submitted that the Tribunal would fall into error by finding that if tax was due:a.it ought to have been paid by the employee;b.if it was not paid, visit the consequence of the omission against the employee;c.subvert the intention of section 37 of the ITA by deducting it from the employee as section 37(4) of the ITA provides a legal assumption of the income of the employee as having been already deducted PAYE.
59.The Appellant relied on the landmark decision in Republic v Commissioner of Domestic Taxes Large Tax Payer’s Office Ex-Parte Barclays Bank of Kenya Ltd [2012]eKLR where the court restated the position in Cape Brandy Syndicate V Inland Review [1920] 1 KB 64 and stated thus:“In a taxing Act, one has to look at what is clearly said. There is no room for intendment as to a tax. Nothing is to be read in, nothing it to be implied. One can only look fairly at the language used… If a person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be.”
60.In conclusion, the Appellant submitted it was inviting the Tribunal to apply the law as it is, which is that the Appellant had no obligation to remit tax, and in the end, no consequence should befall him where there has been an omission.
61.The Appellant submitted that in paragraph 21 of the respondent’s statement of facts, the Respondent contended that the Appellant filed nil returns despite acquiring four properties, for which stamp duty was duly settled. The Appellant submitted that this was in compliance with the circulars issued by the Ministry of Foreign Affairs, and not evasion as claimed by the Respondent. Notably, this information was availed to the Respondent prior to confirmation of the assessments. The Appellant submitted that the Respondent later conceded to this position in paragraph 9 of their supplementary statement of facts.
62.The Appellant submitted that his income was neither taxable, nor regular for any demands regarding salaries, emoluments and deduction of PAYE be made through him.
Whether the Appellant reasonably complied with the provisions of Sections 23 and 59 of the TPA
63.The Appellant submitted that in regard to the Respondent’s averments in paragraph 9 of its statement of facts, the Appellant confirmed that it averred before the Tribunal its employment contracts, bank statements and all the Purchase Agreements of the properties purchased from his salary income.
64.The Appellant submitted that there was no such request. Indeed, the body of the electronic mails stated as follows:“July 17th 2023…Kindly submit all the relevant documents to support your objection...”“September 9th 2023Abel Mokaya (KRA): Please note that we need the current letter of appointment. The attached one expired automatically on the 15th November 2011. Share with us the current one to enable us review.August 9th 2023Kibet Sergon (Appellant): AttachedSeptember 7th 2023Abel Mokaya (KRA): … We request you to provide us with your appointment letter and advertisement notice (if any) for review to enable us make a determination on the issue objected…July 17th 2023:Abel Mokaya (KRA): Kindly submit all the relevant documents to your objection …Attached documents: Employment attestation letter Kibet Sergon 2023 JanuaryTaxes of the UN Staff Convention WHO Appointment letter (Removed by Abel Mokaya)”
65.The Appellant submitted that it was apparent to him that the issue of availing bank statements and pay slips arose when the Respondent confirmed its assessment vide the objection decision dated 11th September 2023 and that while he acknowledged the import of sections 23 and 59 of the TPA, he submitted that the he could not be required to produce third-party documents that he was privy to or even other extraneous documents as this would be unreasonable and untenable.
66.This position was reiterated in Kenya Revenue Authority v Man Diesel & Turbo Se, Kenya [2021] eKLR where Mativo J (as he then was) found as follows:“…Whereas the said section obliges a taxpayer to avail records, the flip side of this position is that a party can only produce documents in his possession. It could not have been the intention of the law to compel tax payers to produce documents in the hands of a third party and more so, if the transactions were undertaken by third parties …”
67.The Appellant submitted that he produced all the documents that were requested of him. There was no further documentation or information that was requested that was reasonably expected to be within his knowledge that he failed to avail to the Respondent and that having done so, his evidentiary burden shifted to the Respondent to prove that monies in question were not sourced from employment income. This position was espoused in Mbuthia Macharia v Annah Mutua Ndwiga & Another Civil Appeal No. 297 of 2015 [2017] eKLR.
68.The Appellant further submitted that, by virtue of the documents availed in support of the objection, he overcame the presumption of correctness established in Hoefle v Commissioner 114 T.C. 182 [2000] which in effect provides that taxpayers can challenge the presumption made on the Commissioner’s position by showing that the commissioner’s position lacked a factual basis.
69.The Appellant submitted that the Tribunal ought to note that the presumption of correctness arose from the Respondent’s determination/assessment. The presumption remains until the taxpayer produces competent and relevant evidence to support his/her position. When the taxpayer comes forward with such evidence, the presumption vanishes, and the case must be decided upon the evidence presented. In the instant case, it was clear from the correspondence availed by the Respondent, particularly that on the 9th of September 2023 electronic mail, that the document requested was the appointment letter and that in the 17th July, 2023, no further documents were specified.
70.The Appellant submitted that it was further evident that when the Respondent called for an updated letter of engagement, the Appellant provided an attestation letter from his employer, a circular from the Ministry of Foreign Affairs, an appointment letter, and HR system-generated personal details and it would then follow that a decision made outside the documents supplied and the scope of communication would be extraneous, ill-fated and in violation of the provisions of the TPA.
71.The Appellant in its submissions relied on the case of Fleur Investments Limited v Commissioner of Domestic Taxes & another [2018] eKLR where the court held as follows:“This case falls squarely on all fours with the case of Municipal Council of Mombasa vRepublic & Umoja Consultants Limited because clearly, the Respondents failed to consider the very relevant facts that their request for an audit meeting has already been met, all documents requested for had been availed and examined, and yet the assessment was premised on the erroneous premise that the appellant has failed to comply with the said requests. The need to take into account the relevant considerations and ignore irrelevant facts in the decision-making has close nexus with the need to act reasonably.”
72.On the strength of the compliance with section 51 of the TPA and the proof of the same being on record, and further based on precedent established by this court in Amritlal Karcha Savla v Commissioner of Domestic Tax, the Appellant invited the Tribunal to find that he discharged his burden of proof by furnishing the documents requested.
73.The Respondent submitted that the Appeal arose due to the Appellant’s assertions that he was exempt from taxation because he was an official WHO. The Respondent submitted that the Appellant's averment that income derived is exempt from tax is wrong. The Respondent averred that it operates on a self-assessment regime of accounting for taxes as guided by TPA and more particularly Section 24(1) of the TPA which states as follows:''A person required to submit tax returns under a tax law shall submit the returns in the approved form and in the manner prescribed by the Commissioner"
74.The Respondent submitted that it noted that the Appellant was filling nil returns in its self-assessment despite earning income as an employee of United Nations. The Appellant , in the view of the Respondent did not dispute the fact that he is an employee of United Nations and that he received salary paid but rather that the income was tax exempt. The Respondent also submitted that the Appellant contended that the income he derived outside Kenya was not subjected to tax.
75.The Respondent submitted that according to the ITA income earned outside Kenya by a resident is subject to income tax and that Section 3(2) of the ITA states that the income upon which tax is chargeable includes gains or profits from employment or services rendered, regardless of where the income was earned. The Respondent stated that Section 5(2)(a) of the ITA further clarifies that gains or profits include wages, salary, and other allowances received in respect of employment or services rendered, even if the income was received in a year of income other than the year it was earned. Section 3(1) and (2) of the ITA provides as follows:“Subject to, and in accordance with, this Act, a tax to be known as income tax shall be charged for each year of income upon all the income of a person, whether resident or non-resident, which accrued in or was derived from Kenya.”“Subject to this Act, income upon which tax is chargeable under this Act is income in respect of-i.gains or profits from-ii.any business, for whatever period of time carried on;iii.any employment or services rendered;ivany right granted to any other person for use or occupation of Property ..........”
76.The Respondent submitted that based on the provisions of the Law that it cited, the Appellant's allegation that it was not to be subjected to tax was wrong, since income accrued in Kenya or not is subject to tax. The Respondent submitted that it noted the Appellant’s averment that even though it was to pay tax, it was the employer's responsibility to remit PAYE as provided for under Section 37(1) of the ITA.
77.The Respondent submitted that while it was the responsibility of the employer to deduct tax from the Appellant's salaries, its failure to do so still meant that the Appellant benefited from funds he was not entitled to. The Respondent submitted that the income received by the Appellant in the form of salary was chargeable to tax and not exempt under the First Schedule of the ITA. Consequently, Respondent submitted that it noted the Appellant’s reliance on Paragraph 27 of the First Schedule of the ITA in stating that his income is exempted, which is inapplicable in this case. The Respondent cited the provisions of the said paragraph 27 though the same will not be regurgitated by the Tribunal as the same is reproduced elsewhere in this Judgement.
78.The Respondent submitted that paragraph 27 of the ITA as referred to by the Appellant relates to technical assistance upon which the Appellant had not demonstrated the nature of work he is engaged in. However, the Appellant provided a letter dated 12th November 2009 and 23rd January 2023 that confirms his appointment as an employee of United Nations but did not adduce any fact that Appellant was engaged in technical activities.
79.The Respondent submitted that the Act[sic] is clear as it only provides for exemption from taxes where one is non-resident or where one is a resident strictly for purposes of performing those duties. It argued therefore that the Appellant does not qualify for exemption since he is a resident person in Kenya and not engaged in such activities.
80.The Respondent submitted that the Appellant argued that the following Sections of the Headquarters Agreement between United Nations and the Republic of Kenya [1975] provide for exemptions and the category of United Nations officials eligible. The Respondent reiterated the provisions of section 28(d) (e) which the Tribunal will not rehash.
81.The Respondent submitted that the Appellant went ahead to state that he enjoys privileges pursuant to the Privileges Act that provides for exemption from taxes to ascertain organization or persons that relates to diplomatic or consular relation and cited Section 18(b) of the International Convention.
82.The Respondent submitted that Section 17 Article V of the Privileges Act specifies the names of officials who will be provided from time to time. The Section provides as follows:“The Secretary-General will specify the categories of officials to which the provisions of this Article and Article VII shall apply. He shall submit these categories to the General Assembly. Thereafter these categories shall be communicated to the Governments of all members. The names of the officials included in these categories shall from time to time be made known to the Governments of members.”
83.The Respondent submitted that Section 9(2) (b) (iii) of the Privileges Act sets out the privileges of certain International organizations and persons connected therewith and states as follows:“This section shall apply to an organization, which the Minister may, by order, declare to be an organization of which Kenya, or the Government, and one or more foreign sovereign powers, or the government or governments thereof, are members.”“The Minister may, by order-a.provide that an organization to which this section applies (hereinafter referred to as the organization) shall, to such extent as may be specified in the order, have the immunities and privileges set out in Part I of the Fourth Schedule to this Act, and shall also have the legal capacities of a body corporate;b.confer upon-i.any persons who are representatives (whether of governments or not) on any organ of the organization or are members of any committee of the organization or of an organ thereof;ii.such number of officers of the organization as may be specified in the order, being the holders of such high offices in the organization as may be so specified; andiii.such persons employed on missions on behalf of the organization as may be so specified, to such extent as may be specified in the order, the immunities and privileges set out in Part II of the said Fourth Schedule;c.confer upon such other classes of officers and servants of the organization as may be specified in the order, to such extent as may be so specified, the immunities and privileges set out in Part III of the Fourth Schedule, and Part IV of the said Fourth Schedule shall have effect for the purpose of extending to the staffs of such representatives and members as are mentioned in subparagraph (i) of paragraph (b) of this subsection, and to the families of officers of the organization, any immunities and privileges conferred on the representatives, members or officers under that paragraph, except in so far as the operation of Part IV is excluded by the order conferring the immunities and privileges.”
84.The Respondent submitted that the Appellant did not provide any evidence in support to be among the named officers who are exempted from tax. The TPA places the onus of proof on the taxpayer to prove that the Respondent's decision is incorrect. It provides as follows:“In any proceedings under this Part, the burden shall be on the taxpayer to prove that a tax decision is incorrect.”
85.The Respondent cited the cases of Melly and Lelly General Contractors Limited­ v Legal services & Board Coordination (Appeal No. E 827 of 2023) where it was held as follows:“Pursuant to section 56 of the Tax procedure Act and Section 30 of the Tax Appeal Tribunal Act, the burden of proof lies with the Taxpayer to demonstrate that the Commissioner's decision was incorrect."
86.The Respondent relied on the pronouncement of Mativo J. in the case of Kenya Revenue Authority v Maluki Kitili Mwendwa [2021] eKLR where he held as follows:“Burden of Proof is a legal term used to assign evidentiary responsibilities to parties in litigation. That party that carries the burden of proof must produce evidence to meet a threshold or standard in order to prove their claim. If a party fails to meet their -burden of proof, their claim will fail. - Burden of proof at the Tax Court is somewhat unique. At the Tax Court, a taxpayer is required to disprove an assessment by the Commissioner. In other words, a Taxpayer challenging a tax assessment will need to collect and present evidence in order to disprove the Commissioner's position. This is the basic principle....”
87.The Respondent submitted that it was the duty of the Appellant to provide sufficient documentation to prove that he was exempt from paying taxes as an employee of the United Nations as the contract of employment was not sufficient evidence. The Respondent further submitted that in view of the foregoing, and pursuant to the following holding in the case of Francis Edward Opiyo­ v Commissioner of Domestic Taxes( Appeal No. 889 of 2022):''Appellant did not qualify for tax exemption because he was unable to prove that he met the conditions set out in the Privileges Act and the ITA that enabled him to enjoy entitlement to immunity from taxation of his emoluments. Accordingly, the Appellant does not qualify for tax exemption."
88.The Respondent avowed that the Appellant had annexed an agreement between Kenya and the United Nations Environment Programme signed on 26th March 1975. The Respondent submitted that it was important to note that the Appellant works for WHO according to his employment letter and therefore letter by UNEP provided had no nexus with the Appellant since this Agency was not his employer. The Respondent submitted that the Tribunal should not consider the said Agreement.
89.The Respondent submitted and concluded that the assessment was correct, and that it was correct in confirming it, since the Appellant has not adduced his evidence that indeed he was exempted from paying tax. The fact that the Appellant received income meant that he had a duty to declare such income in its tax returns, rather than declaring nil returns.
90.The Respondent submitted that the Appellant ought to be construed to have avoided paying tax and wrongly interpreting the law to be tax exempt.
Issues For Determination
91.The Tribunal has considered the Parties pleadings and documentation and is of the view that this Appeal distils into the following four issues for determination:i.Whether the Appellant’s earnings were solely from his employment with WHO.ii.Whether the Appellant’s employment income is exempt from taxation.iii.Whether the Appellant’s employer, WHO, is subject to the provisions of Section 37 of the ITA.ivWhether the objection decision dated 11th September, 2023 was justified.
Analysis And Findings
92.The Tribunal having established the four issues for determination will proceed to analyze them as follows:
i. Whether the Appellant’s earnings were solely from his employment with WHO.
93.The origin of this dispute was an assessment issued to the Appellant on 12th June, 2023 which indicated that the Appellant owed taxes amounting in the sum total to Kshs. 39,799,180.00 in respect of the 2018,2019 and 2020 years of income. The basis of the assessment was that the Appellant purchased properties and the Respondent, who had carried out a verification exercise on the Appellant’s tax ledger, found that the Appellant paid stamp duty in respect of the purchase of the properties. The Appellant objected to the assessment on 6th July, 2023 on the basis that the entire purchase of his properties was funded by his employment income which is exempt from taxation since he receives the same as a result of his employment with WHO.
94.The Tribunal notes that the Respondent, in its objection decision dated 11th September 2023, confirmed the assessment on the basis that first, the Appellant failed to provide documentary evidence that would have enabled it establish whether the Appellant’s entire income was from employment and that rather than provide bank statements copies of ownership documents, purchase agreements, loan agreements and rent income schedules, the Appellant provided documents to prove that he was employed by WHO namely a letter confirming his appointment with WHO , HR system generated personal details and a circular from the Ministry of Foreign Affairs to all diplomatic missions and organisations.
95.The Appellant was late in filing his Appeal against the objection decision but the Tribunal has established that he indeed sought leave to file his Appeal out of time and was granted leave to do so by the Tribunal, on 28th February, 2024. The matter, having been referred back enables analysis and finding on the substantive issues in the case.
96.The Tribunal notes the Appellant’s assertion that the purchase of the properties was funded solely by his employment income and that since his employment income is exempt from taxation, the Respondent’s decision issued on 11thSepember, 2023 was incorrect.
97.The Tribunal’s must first analyse whether the Appellant did indeed declare all his sources of income and notes the Appellant’s emphasis on funding the purchase of the properties with funds solely from his employment income. However, the Respondent requested that he provide the following documents as it sought to establish whether or not his entire income was from employment:
  • Bank Statements for the period January 2018 to December, 2022
  • Evidence of payment of the property and copies of his ownership documents.
  • Purchase agreements
  • Loan agreements.
  • Rental income schedule.
98.The Tribunal notes that the Appellant did not provide these documents as requested and waited until the Appeal stage and provided some of the documents upon being granted leave by the Tribunal to do so on 19th July, 2024. The Appellant also provided his own computations by way of trial balances for each of the years under review.
99.The Tribunal having reviewed the documents provided noted that the Appellant provided a bank statement in respect to his personal account which clearly shows that he received income from his employer as well as other sources. The Tribunal has reviewed his bank accounts In December, 2018 there was a credit to his personal bank account for an amount marked “December rent” of Kshs. 40,000.00. In January, 2019, the bank statement of the Appellant reflected a credit, a rental payment of Kshs. 107,000.00. There was also an unexplained credit to his bank account on 8th January, 2019 from “Petro alfa energy limited” of Kshs.998,000.00 for fuel supply.
100.Having reviewed the Tribal balances, the Tribunal notes that there is an item marked “loan” which increased in each year between 2018 and 2022. The Appellant did not provide evidence that the funds were from a loan by providing loan agreements as requested by the Respondent or any other documents proving that the funds were obtained from a loan. Upon a perusal of the Agreements, the Tribunal notes that all the properties were purchased in cash.
101.The Tribunal, having reviewed the purchase agreement in respect of a property in Nakuru municipality and Nairobi County notes that the same were purchased in cash for 15,000,000.00 each proving that the Appellant expended Kshs. 30,000,000.00 in cash yet the trial balance in respect of the 2018 reflects an annual employment income of Kshs. 10,123,120.00 and an item marked “loan” of Kshs. 2,137,690.00. The Tribunal notes that the fixed asset marked as “land” is reflected as Kshs. 2,000,000.00 in that year. In 2020, the Appellant purchased two parcels of land, in a different part of Nakuru for total amount of Kshs. 50,500,000.00. However, the Tribunal notes that the trial balance in respect of the 2020 year of income reflects that the Appellant income from employment was Kshs. 8,912,883.70 whilst the loan amount is reflected as Kshs. 7,039,689.00.
102.In the case of Tumaini Distributors Company Ltd v Commissioner of Domestic Taxes (2020) the Court held that a taxpayer must demonstrate that the Respondent’s decision is incorrect. Pursuant to Section 56 (1) of the TPA, the burden of discharging proof that the decision of the Respondent is incorrect lay with the Appellant. The Appellant did not prove that he relied solely on his employment income to purchase the properties by providing source documents such as his pay-slips, loan agreements, rent schedules, interest and dividend schedules to provide a proper differentiation of his sources of income to enable the Respondent make its decision that the funds expended on the purchase of the properties was entirely from his employment income.
103.The Appellant’s proposition that he derived his income solely from employment was an incorrect proposition because the finding of the Tribunal is that the Appellant’s earnings were not solely from his employment with WHO.
ii. Whether the Appellant’s employment income is exempt from taxation.
104.The Tribunal is of the view that the Appellant ought to have differentiated his sources of income because it will now proceed to establish whether one of the Appellant’s sources of income, which is that from his employment at WHO is exempt from tax in Kenya.
105.Article 2 (6) of the Constitution provides as follows:“Any treaty or convention ratified by Kenya shall form part of the law of Kenya under this Constitution”
106.In order to prove that his employment income is exempt the Appellant provided evidence of his appointment letter dated 12th November, 2009 and further provided a notice titled “attestation” issued by the Kenya office confirming that he has a “continuous appointment contract” until 31st December, 2040. The Appellant also relied on the International Convention adopted by the United Nations General Assembly on 13th February, 1946 and amended by Resolution 76 (1) of the United Nations General Assembly on 7th December, 1946.
107.The Tribunal further notes the following provisions of Section 9 of the Privileges Act:“9.Privileges, etc., of certain international organizations and persons connected therewith [emphasis ours]:(1)This section shall apply to any organization which the Cabinet Secretary may, by order, declare to be an organization of which Kenya, or the Government, and one or more foreign sovereign powers, or the government or governments thereof, are members.(2)The Cabinet Secretary may, by order—(a)provide that any organization to which this section applies (hereinafter referred to as the organization) shall, to such extent as may be specified in the order, have the immunities and privileges set out in Part I of the Fourth Schedule to this Act, and shall also have the legal capacities of a body corporate;(b)confer upon-(i)any persons who are representatives (whether of governments or not) on any organ of the organization or are members of any committee of the organization or of an organ thereof;(ii)such number of officers of the organization as may be specified in the order, being the holders of such high offices in the organization as may be so specified; and(iii)such persons employed on missions on behalf of the organization as may be so specified, to such extent as may be specified in the order, the immunities and privileges set out in Part II of the said Fourth Schedule;(c)confer upon such other classes of officers and servants of the organization as may be specified in the order, to such extent as may be so specified, the immunities and privileges set out in Part III of the said Fourth Schedule, and Part IV of the said Fourth Schedule shall have effect for the purpose of extending to the staffs of such representatives and members as are mentioned in subparagraph (i) of paragraph (b) of this subsection, and to the families of officers of the organization, any immunities and privileges conferred on the representatives, members or officers under that paragraph, except in so far as the operation of the said Part IV is excluded by the order conferring the immunities and privileges.(3)An order under subsection (2) of this section shall be so framed as to secure that there are not conferred upon any person any immunities or privileges greater in extent than those which, at the time of the making of the order, are required to be conferred on that person in order to give effect to any international agreement in that behalf and that no immunity or privilege is conferred upon any person as the representative of the Government of Kenya or as a member of the staff of such representative.(4)Where immunities and privileges are conferred upon any persons by an order under subsection (2) of this section, the Cabinet Secretary, by notice in the Gazette—(a)shall specify the persons entitled to immunities and privileges conferred under paragraph (b) of that subsection; and(b)may specify the persons entitled to immunities and privileges conferred under paragraph (c) of that sub-section.”
108.The Tribunal notes the following provisions of Article V of the International Convention before its amendment on 7th December, 1946:“OfficialsArticle VSection 17. The Secretary-General will specify the categories of officials to which the provisions of this Article and Article VII shall apply. He shall submit these categories to the General Assembly. Thereafter these categories shall be communicated to the Governments of all Members. The names of the officials included in these categories shall from time to time be made known to the Governments of Members.Section 18. Officials of the United Nations shall:(a)Be immune from legal process in respect of words spoken or written and all acts performed by them in their official capacity;(b)Be exempt from taxation on the salaries and emoluments paid to them by the United Nations;(c)Be immune from national service obligations;(d)Be immune, together with their spouses and relatives dependent on them, from immigration restrictions and alien registration;(e)Be accorded the same privileges in respect of exchange facilities as are accorded to the officials of comparable ranks forming part of diplomatic missions to the Government concerned;(f)Be given, together with their spouses and relatives dependent on them, the same repatriation facilities in time of international crisis as diplomatic envoys;(g)Have the right to import free of duty their furniture and effects at the time of first taking up their post in the country in question.”
109.The Tribunal notes the Appellant must qualify as an “official” in order for the provisions of the said International Convention to apply. From a reading of Section 17 of Article V, the Secretary General of the United Nations must do the following:
  • Specify the categories of the officials to which the Articles apply.
  • Communicate the categories of the officials to the Governments of all Members
  • Make known to the Governments of members the names of the officials included in these categories from time to time.
110.The Tribunal notes that by a Resolution approved by the United Nations General Assembly on 7th December, 1946 , Articles V and VII of the International Convention were expanded to include staff of the Secretariat of the United Nations. The Tribunal notes that this Resolution is relevant in that it expands the meaning of the term “officials” to include staff of the secretariat of the United Nations. The Resolution was as follows:“Having considered the proposal of the Secretary- General that, in accordancee with Section 17 of Article V of the Convention on the Privileges and Immunities of the United Nations, the categories of officials to which the provisions of Articles V and VII shall apply should include all members of the staff of the United Nations, with the exception of those who are recruited locally and are assigned to hourly rates;…“Approves [emphasis ours] the granting of the privileges and immunities referred to in Articles V and VII of the Convention on the Privileges and Immunities of the United Nations, adopted by the General Assembly on 13 February 1946, to all members of the staff of the United Nations, with the exception of those who are-recruited locally and are assigned to hourly rates.”
111.The Tribunal further notes that by Resolution 179(1) on 21st November, 1947, the United Nations General Assembly approved the Convention, on the privileges and Immunities of Specialized Agencies for accession by Member states. WHO is one of the specialized agencies listed in this Convention. The International Convention entered into force in Kenya on 1st July, 1965 and was acceded to on the same date whilst the Convention on Privileges and Immunities of specialized agencies entered into force on 1st July, 1965 but was acceded to on 9th December, 1994. Kenya is a Member of the United Nations.
112.Vide Legal Notice No. 527 of 1956, the Cabinet Secretary issued an Order cited as “the Diplomatic Privileges (World Health Organisation) Order” which provides as follows at Part E Order No. 11:“E-other Officials Of The Organisation11.Except in so far as in any particular case any privilege or immunity is waived by the Organisation, all officials of the Organisation, other than those referred to in paragraph 9 above, shall enjoy—(a)………………..(b)exemption from income tax in respect of emoluments received by them as officers and servants of the Organisation;”
113.The Tribunal finds that a taxpayer in view of the foregoing paragraphs and citations of the applicable laws must provide the following proof in order for his/her emoluments from employment with the United Nations to be exempt from taxation in Kenya:
  • The taxpayer must provide sufficient and relevant proof of employment with the United Nations or one of its specialized agencies.
  • The taxpayer must prove that he/she is recruited internationally or locally by the United Nations or one of its specialized agencies.
  • The taxpayer if recruited locally must prove that he/or she is not assigned hourly rates.
114.With regard to the instant Appeal, the Tribunal notes that in respect of his employment income, the Appellant adduced as documentary evidence, his appointment letter from the Harare, Zimbabwe office. He also adduced as documentary evidence a further document referred to as an “attestation” from the operations office in Kenya confirming that he has worked for WHO since 2009 and that his appointment ends in 2040.
115.The further view of the Tribunal is that the fact that the Appellant’s recruitment process was competitive is as inconsequential as the fact that he was not recruited locally. This is because even if the Tribunal were to make a finding that the Appellant was recruited locally, he would have been required to prove that he is not assigned hourly rates. However, the Tribunal finds that based on the fact that his letter of appointment was from the Harare Zimbabwe office, the Appellant was not recruited locally. The attestation declared that the Appellant has a “continuous appointment contract”. The finding of the Tribunal is that upon establishing that the Appellant was not recruited locally, it was not necessary to delve into whether or not he was assigned hourly rates.
116.This case is to be distinguished from the Tribunal’s findings in the case of Francis Edward Opiyo vCommissioner of Domestic Taxes [TAT Appeal no. 889 of 2022] wherein it was held by the Tribunal that the Appellant was not entitled to income tax exemption because in the cited case the Appellant was not able to prove that the decision of the Respondent was incorrect since he did not provide evidence that he was an official of the World Food Programme.
117.The Tribunal has not delved into the Appellant’s submissions on the application of Order 27 of Part 1 of the First Schedule of the ITA as the same do not apply to the circumstances in the instant Appeal since the Appellant is resident in Kenya for tax purposes.
118.The Tribunal finds that the Appellant has sufficiently proved he is an official of WHO and has thereby discharged his burden of proving that the decision of the Respondent to subject his employment income to tax was incorrect. The Appellant’s employment income is not chargeable to tax pursuant to the provisions of Section 3(2) (a) (ii) of the ITA as it is exempt from income tax.
(iii) Whether the Appellant’s employer, WHO, is subject to the provisions of Section 37 of the ITA.
119.The Tribunal finds that this issue is rendered moot by its finding that the Appellant’s employment income is exempt from income tax.
(iv) Whether the objection decision dated 11th September, 2023 was justified.
120.The Tribunal having found that the Appellant’s income was not solely from his employment with WHO finds that the objection decision dated 11th September, 2023 was partly justified.
Final Decision
120.Based on the foregoing analysis and findings, the Tribunal makes the following Orders:a.The Assessment issued and confirmed is hereby referred back to the Respondent for appropriate re-assessment and expunging of the Appellant’s employment income from the assessment subject to the provision of documentation in form of pay-slips by the Appellant in respect to the years under review.b.The appropriate re-assessment for the other sources of the Appellant’s income for the years under review subject also to the provision of any other documents the Respondent may require.c.The Appellant to provide documents arising from these orders within 30 days of this judgement and the Respondent to issue its objection decision within 60 days of receipt of all the documents provided by the Appellant.d.Each party to bear its own cost.
121.It is so Ordered.
DATED AND DELIVERED AT NAIROBI ON THIS 25TH DAY OF APRIL. 2025.CHRISTINE A. MUGA - CHAIRPERSONBONIFACE K. TERER - MEMBERELISHAH N. NJERU - MEMBEREUNICE N. NG’ANG’A - MEMBER OLOLCHIKE S. SPENCER - MEMBER
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