NAIROBI, KENYA: Court has temporarily stopped Kenya Revenue Authority (KRA) from freezing Sh 3.5 billion accounts belonging to a Chinese firm over alleged outstanding tax returns.
High Court Judge Chacha Mwita issued orders on April 13, 2017 stopping KRA from demanding the alleged outstanding tax, until an application by China National Aero Technology International Engineering Corporation (CNATIEC), is heard and determined.
The firm contested that the demands by KRA are unjustified and are a threat to its ongoing projects in the country.
KRA ignited the dispute on Monday last week, when it issued four different agency notices to four different banks where the Chinese firm owns accounts, demanding payment of Sh3, 534,648,695 for alleged recovery of taxes so assessed in a default assessment dated May 26, 2016.
Through lawyer Philip Nyachoti, the Chinese firm says the notices were premature in all respect since the subsisting tax resolution mechanisms set out under the Tax Procedures Act 2015 and the Tax Appeals Tribunals Act have not been exhausted.
“Despite the objection the firm raised on April 10, which was the last day for any such objection as provided for under the Tax Procedures Act 2015, KRA proceeded to issue agency notices on the same day thereby denying the firm its right to a fair due process prescribed under the law,” said lawyer Nyachoti.
He said the Chinese firm submitted the self-assessment returns but KRA has refused to audit such returns to determine their correctness, but seeks to collect approximated and estimated taxes without following due process when in actual sense, the company has a credit in taxes of over Sh574 million and has offered to furnish KRA with a bank guarantee of Sh200 million awaiting resolution of the dispute under the Tax Procedures Act 2015.
The firm is apprehensive given that KRA has not copied any of the four agency notices to each of the other banks appointed as its agents and as such there is a real visible and eminent danger that all the four banks could simultaneously debit its bank accounts and remit to KRA a total sum of Sh14, 138,594,780.