Ministry granted Chinese company Sh612m tax waiver

Kenya Revenue Authority acting Commissioner General Rispah Simiyu. [Elvis Ogina, Standard]

ICT Ministry officials in the former President Uhuru Kenyatta government granted a Sh612 million tax waiver to a Chinese firm despite the rule that agency tax cannot be abandoned, a tax agency boss has revealed. Chinese telecom giant Huawei was given a tender in 2019 to deliver a data centre, smart city and surveillance project in Kenya for Sh17.5 billion ($172.7 million).

The Konza Technology City development project was conceived by the ICT Ministry and Huawei to include a cloud data centre, smart ICT network, smart traffic solution, and a State cloud and enterprise service.

Kenya Revenue Authority (KRA) acting Commissioner General Rispah Simiyu said a tax assessment of Sh1.43 billion in principal tax was raised against the ICT Ministry for failure to withhold and remit withholding tax on payments to project contracts undertaken by Huawei on behalf of the ministry.

"To settle the principal tax due, the Ministry of ICT and Huawei Technologies Ltd consulted on their own and agreed that Huawei will pay Sh812.66 million and the Ministry was to pay the tax balance of Sh612.66 million," Ms Simiyu told the National Assembly Committee on Finance.

She noted that Huawei paid Sh812.66 million while the Ministry of ICT applied to Treasury for abandonment of Sh612. 66 million they were to pay.

The committee led by Molo MP Kuria Kimani wondered why officials at the Ministry 'forgot' to withhold taxes.

Baringo North MP Joseph Makilap said the failure to withhold the funds was intentional and aimed at siphoning taxpayers' money.