Rift Valley Railways Kenya Ltd (RVRK) has petitioned the High Court to block the recovery of Ksh 1.6Billion allegedly owed to the Taxman.
The consortium is aggrieved by the Tax Appeals Tribunal’s decision rendered on September 25 allowing the Commissioner of Domestic Taxes to collect the disputed unpaid dues.
RVRK, through lawyer Philip Nyachoti, has protested that it’s operations were likely to be crippled in case the Tribunal’s award was executed before it’s appeal is heard and concluded.
In his certificate of urgency, Nyachoti says the firm has an arguable appeal with high chances of success that is likely to be rendered an academic exercise in case execution of the Tribunal’s award proceeds.
Nyachoti has argued that the Tribunal, chaired by lawyer Mahat Somane, misapplied the law by holding that RVRK was not granted full exemption of taxes in the importation of capital goods. There was documentary evidence to prove that the Treasury Cabinet Secretary had approved the waiver on August 15, 2011, he said in court papers.
Nyachoti acknowledged that the Tribunal partially allowed the appeal by RVRK against tax assessment in the aggregate sum of KSh1,6 billion by ordering reduction of Withholding Tax liability in the sum of KSh56,717,291.
The Tribunal’s dismissal of RVRK’s appeal in respect of other taxes had paved the way for the Kenya Revenue Authority (KRA) Commissioner in charge of Investigations and Enforcement to initiate recovery measures for the balance of KSh 1,639,517,383, he said.
Nyachoti explained that the global Covid-19 pandemic had slowed down business and the recovery of the money from RVRK was likely to cripple it’s operations, he said.
The firm’s Chief Finance Officer, Bong Yoon, said in his supporting affidavit that RVRK was exposed to enourmous financial loss. The firm was ready to provide reasonable security for the contested award pending the outcome of the appeal, he said.
The consortium was established to manage the Kenya-Uganda railway line and to carry out major expansion and modernization of infrastructure and fleet.
KRA conducted routine analysis of it’s business between 2011 and 2016 on Customs Duty, VAT and Withholding Tax. The agency issued the firm with a notice dated September 13, 2017.
Consequently, RVRK issued an objection on October 12, 2017. When KRA upheld the disputed tax assessment on December 11, 2017, the dispute landed to the Tax Appeals Tribunal.
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