Tag: Sale of software

Kenya vs Seven Seas Technologies Ltd, December 2021, High Court of Kenya, Income Tax Appeal 8 of 2017 [2021] KEHC 358

Kenya vs Seven Seas Technologies Ltd, December 2021, High Court of Kenya, Income Tax Appeal 8 of 2017 [2021] KEHC 358

Seven Seas Technologies under a software license agreement purchased software from a US company – Callidus software – for internal use and for distribution to local customers. Following an audit, the tax authorities found that Seven Seas Technologies had not been paying withholding taxes on payments in respect of the software license agreement with Callidas. An assessment was issued according to which these payments were found to by a “consideration for the use and right to use copyright in the literary work of another person” as per section 2 of the Income Tax Act, thus subject to withholding tax under Section 35 (1)(b) of the Kenyan Income Tax Act. Seven Seas Technologies contested the assessment before the Tax Appeals Tribunal where, in a judgement issued 8 December 2016, the tribunal held that Seven Seas Technologies had acquired rights to copyright in software that is commercially exploited and that the company on that basis should have paid withholding tax. A decision ... Read more