The Kenya Revenue Authority has been stopped from demanding over Sh3.5 billion from a Chinese engineering company.
Justice Chacha Mwita also stopped the taxman from freezing the accounts of China National Aero Technology International Engineering Corporation until he determines a suit in which the company is challenging KRA’s powers to demand tax arrears.
“The respondents (KRA) are hereby restrained from demanding payment of Sh3,534,648,695 or proceeding to enforce its finding that the company had defaulted it remitting its tax obligations until the final determination of the dispute,” ruled Chacha.
The company, through lawyer Philip Nyachoti, filed the suit arguing that KRA had on April 10 illegally wrote to four banks demanding that they withhold money belonging to the company for settling tax arrears. According to Nyachoti, KRA’s decision was premature given that the company has already filed another case questioning how their tax was calculated to reach the exorbitant amount.
“The company has done due diligence in filing its tax obligations and submitted a self-assessment returns but KRA has refused to audit it to determine the correctness of amount due. They are only interested in collecting illegal taxes,” said Nyachoti. According to the lawyer, the company only has tax arrears totalling Sh574 million and has offered to give KRA a bank guarantee of Sh200 million pending determination of the dispute but they have declined the offer.
He said freezing the firm’s accounts holding more than Sh14 billion would paralyse its operations, especially the construction of a twin-tower skyscraper next to Villa Rosa Kempinski Hotel and render their 2,000 employees jobless.