Introduction
This alert highlights our analysis of the Tax Appeals Tribunal decision in Tax Appeal No. E473 of 2025 Waweru versus Commissioner of Domestic Taxes [2026] KETAT 12 (KLR).
The judgment draws a clear and critical distinction between insurance brokerage services, which enjoy VAT exempt status, and asset management services, which the Tribunal confirmed are subject to VAT at the standard rate of 16%.
This decision is particularly instructive for insurance intermediaries who also engage in ancillary financial services such as asset management, investment advisory, or pension product sales, and who may have assumed that the VAT exemption applicable to their core insurance activities extends broadly to all commission income earned.
Background
The Appellant, a Kenyan citizen, engaged in insurance agency and brokerage services as well as earned commissions from the sale of asset management financial products.
Kenya Revenue Authority (KRA) applied VAT at 16% on the assessed amounts relating to asset management commissions on the basis that the Appellant, being registered for VAT, had failed to account for VAT. The Appellant filed a notice of objection dated 29 January 2025 disputing the assessments. KRA issued its objection decision on 27 March 2025 upholding the assessments, prompting the Appellant to appeal to the Tribunal.
Key to note is that Appellant’s VAT registration arose in the context of the Tax Laws (Amendment) Act 2020, which had removed insurance agency and brokerage services from the VAT exemption list under Paragraph 10, Part II of the First Schedule to the VAT Act 2013.
This change was, however, declared unconstitutional and unlawful by the High Court on 16 December 2021 courtesy of the Association of Kenya Insurers (AKI) v Kenya Revenue Authority & 2 others [2021] KEHC 402 (KLR) decision, which restored the VAT exempt status of insurance agency, insurance brokerage, and securities exchange brokerage services.
The Appellant averred that he applied to KRA for VAT deregistration on 27 May 2022, however his application was not considered which meant that the Appellant’s VAT obligation was never cancelled.
Below is a brief summary of the key arguments advanced by the parties and the Court’s determination.
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