Justice John Mativo has lifted an order stopping the Kenya Ports Authority (KPA) from accessing its seven bank accounts over a Sh1.9 billion tax dispute with the Kenya Revenue Authority (KRA).
The High Court temporarily lifted the order following a request by the State Agency which complained that its operations would come to a halt if it fails to access the funds held in the accounts.
“If the court does not intervene as a matter of urgency, then the agency notices by KRA (to the banks) also have extremely dire consequences as to the KPA’s operations. The agency notices will lead to ultimate shut down of the KPA’s business both locally and regionally and paralyzing business globally,” KPA told the court.
The order freezing KPA’s accounts at Standard Chartered, NCBA, KCB, Equity Bank, Diamond Trust Bank, Co-operative Bank and Citibank was issued on Monday.
KRA also issued the banks with agency notices in respect of funds held in the accounts as it sought to collect defaulted taxes amounting to Sh1.99 billion.
This taxman’s move pushed KPA to file an urgent request on Thursday asking the court to temporarily lift the order.
Justice Mativo stated that the temporary order unfreezing the accounts will remain in force until hearing and determination of the application filed by the KPA against the KRA move is made.
Lawyer Cecil Miller who represents KPA accused KRA of rushing to court to freeze the bank accounts before responding to the KPA’s objection to the tax assessment as stipulated in the Tax Procedure Act.
Mr Miller explained that the dispute relates to a payment of Sh1.99 billion made to Toyota Tsusho Corporation and Med Marine Kilavuzkul for ‘associated infrastructure expansion programs’ to fasten operations at the Mombasa port.
The payment was also meant to procure supply of port equipment including ship-to-shore gantry cranes, rubber-tyred cranes and salvage tug boats.
The dispute has dragged since last year when KRA demanded payment of the sum on withholding income tax assessment from the Mombasa Port Development Project’s phase 11 which is funded by the Japan International Cooperation Agency.
The KPA filed a case at the Tax Appeals Tribunal last year challenging taxman’s demands but the tribunal ruled in favor of KRA.
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