Nairobi, July 15 -- The Kenya Revenue Authority (KRA) has suffered a setback after the Court of Appeal ruled that software support services supplied by a Kenyan company to its foreign affiliates, qualify as exported services and are not subject to local Value Added Tax (VAT).

The decision overturns a 2024 High Court judgment and cancels a Sh40.6 million VAT assessment against Sybrin Kenya Ltd.

In a judgment that clarifies how cross-border digital services should be taxed, the court held that the company's foreign affiliates, rather than Kenyan banks using the finished software, were the primary consumers of the services.

The three-judge bench allowed Sybrin Kenya's appeal and restored a 2021 decision by the Tax Appeals Tribunal, which ...