KRA quashed Sh700m income tax for Bluebird airline

Kenya Revenue Authority (KRA) recomputed the income tax for an airline for the financial years 2017 to 2022 which led to the reduction of accumulated losses to Sh700 million in 2021.

Documents from the taxman indicate they had initially filed more than Sh1 billion tax case against Bluebird Airlines based on assessment but offered to recompute the amount thus reducing it to Sh350 million and agreed to cancel the notices it issued in January last year seeking the said amount.

KRA Commissioner of Domestic Taxes,  KRA and Bluebird Airlines resolved the dispute and recorded a consent dated January 13, 2023 allowing the taxman to lose millions.

Bluebird Aviation sued KRA in January last year leading to an arbitration that reduced the amount after it argued that the taxman’s action to issue them with the notices violated their right to exhaust dispute resolution mechanisms.

KRA signed a consent drawn by Bluebird conceding Sh700 million because of recomputed accounts, which were not provided in court and the taxman did not file response after the airline filed a Judicial review.