Africa Oil - Kenya High Court Tax Appeal Update

Source: www.gulfoilandgas.com 12/2/2022, Location: Africa

Africa Oil Corp. ("AOI", "Africa Oil" or "the Company") provides an update on its appeal process in relation to Kenya Revenue Authority's ("KRA") corporate income tax ("CIT") and value added tax ("VAT") assessments, made in connection with farmout transactions completed during the period of 2012 to 2017.

On April 8, 2020, Africa Oil announced that Kenya Tax Appeals Tribunal ("TAT") had ruled on the Company's appeal related to KRA's CIT and VAT assessments, made in connection with farmout transactions completed during the period of 2012 to 2017. TAT ruled in favour of the Company with regards to the CIT assessments and in favour of KRA with regards to the VAT assessments. Subsequently, Africa Oil filed an appeal with the High Court of Kenya to challenge the VAT decision and KRA filed an appeal in relation to the CIT decision.

On 30 November 2022, the High Court of Kenya announced its decisions on the Company's Tax Appeal Case Number 024 (consolidated with KRA's Tax Appeal Case Number 051), and the judgment was made available to the Company yesterday. The Company's appeal with regard to the VAT assessment was partly successful and the High Court concluded that the Company owes VAT in an amount of Kenyan Shillings 2,293,334,065 (approximately US$ 18.7 million). The KRA's appeal with regard to the CIT decision was partly successful and the High Court concluded that the KRA was correct to disallow certain costs claimed by the Company; however, the High Court's decision on the KRA's appeal with regards to CIT is not expected to have a material cashflow impact to the Company.

Africa Oil is taking legal advice on the options available to it in view of this decision, including the option to appeal.


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