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Court dismisses attempt to stop Sh598m tax case

By Evelyn Kwamboka | October 16th 2020

A trading company has lost its bid to stop the Kenya Revenue Authority (KRA) from collecting Sh598 million in unpaid taxes even as the case is pending before a tax committee.

MAT International Ltd had filed an application in court under judicial review on the apprehension that enforcement measures would be taken against it by the taxman.

High Court judge Erick Ogola, however, ruled the company was attempting to obtain orders when its appeal challenging KRA’s demand for the money was still pending before a local committee that offers an internal dispute resolution mechanism on the assessment of tax.

“This fear is misplaced and unfounded because under ICTA (Income and Corporation Tax Act), when an appeal is lodged to the local committee the collection of tax is stopped until the appeal is determined,” said the judge.

“It would therefore amount to an abuse of court process to allow two processes go on over same issues, one of whose outcome might still come back to this court for review,” he added.

Justice Ogola said the company should have waited for the committee’s outcome before rushing to court to seek for orders quashing KRA’s demand.

In the dispute, MAT International claimed to have received a demand letter from KRA dated October 14, 2009 after an audit of its 2001 and 2002 income tax returns, with a tax assessment of Sh598,183,012.

The company said it disputed the amount through its tax consultants and subsequently made proposals for settlement of the tax, which KRA rejected.

“The applicant states that it was always willing and committed to reach a fair settlement and pay tax and had even offered to pay Sh52,625,995 by a letter dated April 9, 2020,” noted the judge in the ruling.

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