Gordon Gekko wrote:The tax can be recovered as input tax. The only problem is that it must be paid immediately but takes forever to recover so kq has to finance it. They can however argue that when the contract was signed the tax didn't exist, a weak argument but the commissioner-general can exercise latitude.
KRA could seize the plane or other assets as well as freeze bank accounts AND impose penalties. So KQ is screwed since the refund will take ages to recover.
When KQ pays VAT on such purchases, can it 'sell' the VAT rebate/refund to another entity e.g. Nakumatt which can offset the VAT paid with VAT payable?
Nakumatt probably remits VAT [collected from final users/buyers] to KRA since its Input VAT is lower than Output VAT. Or does poor KQ need to become a retailer just so it can 'collect' VAT (from consumers) to offset its huge Input VAT?
Doesn't a Treasury rep sit on KQ's board? What was KQ doing when this Bill was being drafted?
Of course, the CEO was busy lobbying for another year on his contract to make sure the 787 gets delivered so he can claim 'success' and get a huge payoff [gratuity, etc] as a sendoff package!
@obiero - Pole sana. I am glad I stayed out. And I see little significant progress for KQ in the immediate future. Perhaps in 2015-16. The financing costs will kick in for KQ for both the planes and VAT. And the CEO's send-off package.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett