KICC battles KRA in court over Sh1.5b tax dispute

KRA has threatened to freeze KICC accounts, a move management warns would harm Kenya's global image. [File, Standard] The Kenyatta International Convention Centre (KICC) is embroiled in a court battle with the Kenya Revenue Authority (KRA) over a Sh 1.5 billion tax debt. KICC, in its case before Justice Wayua Mong'are claimed that KRA has issued a notice to freeze its accounts over the disputed amount. "The ex-parte applicant is a Strategic State Corporation mandated to host and manage high-profile national and international events on behalf of the Republic of Kenya, hence contributing directly to the Country's global reputation and general substantial foreign exchange earnings," argued KRA's lawyer Karisa Iha. On August 11, this year, KRA wrote to the KICC managing director demanding that the government-owned facility should pay corporation tax, Pay As You Earn (PAYE), and Value Added Tax (VAT). For Corporation Tax, KICC was required to pay Sh 978 million, while PAYE was Sh113 million, which included Sh54 million interest. For VAT, the taxman demanded Sh56 million in addition to migrated legacy balance, which is Sh243 million. In total, the court heard that the principal tax arrears amounted to Sh 1.3 billion while the rest was interest accrued for non-payment. KRA gave KICC until August 18 to honor the demand or else it would attach all its bank accounts. In response, KICC informed KRA that there was a circular from the Head of Public Service, which was copied to all Cabinet Secretaries and Attorney General directing it to cease freezing public entities accounts. It also alleged that the demand was based on history that it was unaware of. KICC asserted that it had committed to pay Sh5 million a month to clear its tax arrears, something, which it alleged to have been doing every month without fail. "Whereas KICC is committed to honour its debt obligation, the freezing of accounts based on non-disclosed information is an affront to the existence of the corporation due to the sensitive nature and the services it provides. Note that KICC is up to date in payment of all taxes and therefore penalizing the organization based on history is not justified," KICC's Chief Executive Officer James Mwaura responded. In court, Iha alleged that KRA's decision amounted to shooting the government in the foot as it would disrupt events, including those that involved President William Ruto. "Any operational disruption such as freezing of bank accounts or asset seizures will have direct national and diplomatic implications potentially jeopardizing events involving Heads of State. Global institutions and International investors," Iha argued. According to Iha, it would be unfair to freeze the accounts while KICC and KRA had a binding agreement on how to pay the taxes owed. In his supporting affidavit, Mwaura told the court that the enforcement notice was premature as there were other measures that would have been taken before resorting to going for the bank accounts. "The said seven days' demand notice is oblivious of the fact that the matter is under active consideration by other government offices such as the Principal Secretary -National Treasury and Economic Planning as well as the Principal Secretary- State Department for Tourism. The ex-applicant is aggrieved by the said decision and I do pray that it be quashed and any enforcement measures in place stayed," said Mwaura. According to him, KRA failed to honour its word on unpaid taxes, adding that KICC management was not given a chance to argue their case before KRA cracked whip.

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KICC battles KRA in court over Sh1.5b tax dispute

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