The Tax Appeals Tribunal has delivered a landmark ruling giving the Kenya Revenue Authority (KRA) the green light to classify all bank deposits as taxable income—unless taxpayers can provide clear evidence showing otherwise.

The decision came in Tribunal Appeal E1116 of 2024, determined on September 2, where a pipe manufacturing company had contested KRA’s tax assessment.

The firm argued that deposits made into its accounts between 2019 and 2022 included shareholder capital injections and loans, not just income.

It pointed to Ksh100 million in initial share capital, an additional Ksh29.4 million top-up, a Ksh31.7 million loan, and Ksh24.6 million in shareholder support. According to the company, these amounts should have been exempt from income tax.

The tribunal dismissed the appeal, saying the company failed to provide credible proof. Documents like uncertified bank statements and SWIFT slips were considered inadequate.

The tribunal also questioned the validity of the supposed Ksh31.7 million loan, which was interest-free, repayable at the company’s discretion, and unsupported by any repayment records.

This ruling sets a serious precedent: if money lands in your account, KRA can treat it as taxable income unless you have proper documentation.

For businesses, this means capital injections, loans, or any other non-revenue funds must be backed by verifiable records—board resolutions, shareholder agreements, loan contracts, repayment schedules, and eTIMS-compliant invoices.

For ordinary Kenyans, the message is the same: undocumented deposits—whether from family support, loans, or cash infusions—could expose you to tax claims. The burden of proof lies squarely on you, not KRA.

In short, the tribunal has reaffirmed KRA’s aggressive approach to revenue collection in a tight economy, and Kenyans—both individuals and companies—will now need to keep meticulous financial records to avoid unexpected tax bills.