ECP Kenya Limited provided data collection and analysis services for portfolio companies and responded to requests from its associated entity, ECP Manager LP, for a cost-plus remuneration with a seven percent mark-up. The company maintained that its activities were limited to routine administrative support and excluded involvement in investment decision-making or fundraising.
The tax authorities contested this position, asserting that ECP Kenya carried out functions that were central to the investment advisory process. A key factor in their argument was the role of Bryce Louise Fort, ECP Kenya’s Managing Director, who was also a shareholder in ECP Manager LP and other related entities. His participation in investment decisions and service on boards of investee companies indicated influence beyond that of a routine service provider. The tax authorities rejected the cost-plus method applied by ECP Kenya and instead used a profit split method to reallocate profits.
ECP Kenya appealed the assessment to the Income Tax Appeals Tribunal. The Tribunal dismissed the appeal and upheld the assessment issued by the tax authorities.