The High Court will from Monday hear a dispute between Tatu City and the Ethics Anti-Corruption Commission (EACC) as the owners of the multibillion real estate project in Kiambu fight claims of tax evasion and money laundering.
Tatu City and Kofinaf Company filed the case last year, seeking to quash letters sent to the Lands PS seeking the State to place caveat or purchase warning on 33 pieces of land.
In the letters, the ethics commission also sought to restrict further transactions on the parcels, pending the outcome of investigations into alleged tax evasion and money laundering.
Tatu say EACC has no powers to order issuance of caveats on tax disputes nor probe money laundering claims.
The commission accuse Tatu city of under valuing property that is later transfered to related firms to allow payment of lower stamp duty–tax equivalent to 2 percent of land transfer value.
The land will be later transfered to newly formed foreign registered companies as shares with the non-Kenyan firm dispossing the plot at market value locally, ultimately escaping paying stamp duty because its not listed in Nairobi.
In one such scheme, the EACC reckons that Tatu undervalued a property and sold it for Sh748 million to a local firm that moved it to foreing firm, which transfered the property locally at market value of Sh4 billion.
The state received stamp duty on Sh748 million and not Sh4 billion.
The EACC want case dismissed and allowed to complete the investigations.
The commission say the chain of transactions on the sale of land and corporate special vehicle created were intended to separate, screen and conceal the control of the real owners over the funds generated from the propert deals.
Some of the companies involved, EACC adds, were registered in Mauritius and used to deny KRA taxes.
Justice John Onyiego directed the parties to appear before him today for submissions.
Tatu is opposed to the probe, saying it would derail its project, intially a 1000-hectare plan in Kiambu that is tartgeted to house 62, 000 people and offer residential, commercial, industrial and recreation space for property development.
The firm say KRA Commissioner General, not the EACC, who can order registration of caveats on private property to secure an obligation to pay tax.
Tatu adds that the Proceeds of Crime and Anti-Money Laundering Act does not mandate the EACC to prohibit any dealings with any private property on account of investigations into tax evasion or money laundering.
Through lawyer Issa Mansur, Tatu say transactions worth millions of shillings risk being halted if the EACC is allowed to carry on with its investigations, placing of caveats and obtaining of the original documents sought.
He said the allegations and investigations could damage the company’s businesses and deter potential buyers of the said parcels of land.
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