M-Kopa addresses tax challenges amid expansion plans

M-Kopa, one of Kenya's pay-as-you-go fintech companies, is facing tax-related challenges as it continues to expand its operations.

According to M-Kopa’s General Manager, Martin Kingori, since its inception, the company has paid Ksh.17 billion in taxes.

He however also noted that the company has faced rising costs, with the landing cost of its products increasing by 37.5% since July 2022 due to higher taxes. This financial strain has led to M-Kopa establishing a local assembly factory in Nairobi.

Kageni Mburu, the compliance director at M-Kopa, addressed concerns raised by the Kenya Revenue Authority (KRA) over bad debts, stating that the company had taken necessary steps to address defaulters.

This follows a landmark ruling by the Tax Appeals Tribunal in which M-Kopa was fined Ksh.885.87 million resulting from absence of evidence about its place of management and bad debt accrued from defaulters.

The cases, which are still in court, are yet to be resolved following appeals from both KRA and M-Kopa.

“We are compliant in terms of PAYE and VAT,” Mburu noted, adding that M-Kopa is fully committed to maintaining transparency with the taxman.

The company also highlighted the potential impact of a proposed reintroduction of taxes on locally assembled devices, a move that M-Kopa argues would undermine investor confidence and the progress made through local manufacturing.

“We want to work with the government to ensure that taxation policies do not hinder growth,” Kingori said, emphasizing M-Kopa’s commitment to contributing to Kenya’s economic development while balancing the challenges of rising costs and tax obligations.