Tullow Oil has challenged a tax assessment of about Ksh23 billion issued by the Kenya Revenue Authority (KRA) over the sale of its Kenyan business.
The dispute relates to the company’s disposal of its full shareholding in Tullow Kenya BV to Gulf Energy Group in a deal with a minimum consideration of $120 million (Ksh15.5 billion).
In a statement, the company said it had been notified of the tax demand, which it said was linked to alleged unpaid VAT and Capital Gains Tax arising from the transaction.
"The Group is aware of a tax assessment for $170 million (Ksh21.96 billion) from the Kenya Revenue Authority relating to alleged underpaid VAT and Capital Gains Tax on the disposal of its 100% shareholding in its Kenyan subsidiary, Tullow Kenya BV, to the Gulf Energy Group for a minimum consideration of $120 million (Ksh15.5 billion)," the statement read.
In its audit covering the period 2020 to 2025, KRA demanded a total of $141.6 million (Ksh18.29 billion) in Value Added Tax (VAT), $35.6 million (Ksh4.6 billion) in Capital Gains Tax (CGT), and about $1 million (Ksh129.15 million) in Withholding Tax.
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Tullow said it strongly disagreed with the assessment and would formally challenge it together with Gulf Energy through the objection process.
"The Group's clear and firm position is that the assessment is wholly without merit, and it intends in conjunction with Gulf Energy to contest the assessment through the regular objection process," the statement added.
The company also stated that it does not expect any immediate financial impact from filing the objections or from the appeals process.
"There will be no cash outflow in respect of lodging these objections, nor does the Group expect cash outflow on completion of its appeal process. Therefore, a provision for uncertain tax treatments in respect of this risk has not been recorded," the statement concluded.
Meanwhile, this comes a day after KRA announced that export processes on the Integrated Customs Management System (iCMS) will be integrated with Value Added Tax (VAT) return filing on iTax.
In a public notice on Tuesday, April 28, the taxman said the changes will take effect from May 1, 2026.
KRA noted that export data captured and validated in iCMS will automatically be reflected in VAT returns filed through iTax.
According to the authority, the change will apply to exports destined for the Single Customs Territory, as well as other international markets, including Export Processing Zones (EPZs) and Special Economic Zones (SEZs).
"Kenya Revenue Authority notifies taxpayers and the public that, effective May 2026, the VAT return export data in iCMS will be integrated with the declaration of zero-rated supplies in the VAT return in iTax.
"This means that validated export values will be automatically prefilled in the VAT return upon issuance of the relevant export documents by Customs," read the notice in part.
KRA also said exporters and their clearing and forwarding agents will be required to ensure accurate data capture during the export process.
This includes providing the exporter’s Personal Identification Number (PIN) and valid TIMS or eTIMS zero-rated invoice numbers when lodging export documents in iCMS.
The taxman made it clear that only export values that are validated in iCMS and properly linked to the exporter’s PIN and invoice will be allowed in the VAT return.
"To support accurate prefilling, exporters and their clearing and forwarding agents must capture the exporter’s PIN and valid TIMS/eTIMS zero-rated invoice number when lodging export documents in iCMS," KRA stated.
Further, the authority said exports of taxable services will also be prefilled in iTax based on generated and transmitted TIMS or eTIMS invoices for the relevant tax period.
