Home TRENDING Taxpayers that fight KRA in court over TAX demands will have to...

Taxpayers that fight KRA in court over TAX demands will have to first deposit 50% of the disputed amount at CBK

Firms and individuals battling the Kenya Revenue Authority (KRA) in court over tax claims would be required to deposit half of the disputed sum in a CBK account. Ukur Yatani, Treasury Cabinet Secretary, says the proposed revisions to the Tax Procedures Act are aimed at encouraging out-of-court settlements in response to complaints that the KRA is unable to collect billions of dollars as lawsuits drag on for years.

However, the measure has the potential to harm companies’ cash flow and discourage many from filing lawsuits against the KRA.
Currently, judges decide if KRA’s security needs are reasonable, and then determine the amount to be supplied as a deposit or a bank guarantee. The KRA claims that billions of shillings worth of cases have been sitting in the courts for years, hindering its capacity to improve income collections.

However, due to its expected impact on the cash flows of businesses caught up in the KRA’s tax wars, the idea is likely to attract pushback. “What will happen to my business if I can’t afford the 50%?” And if I pay, and we all know that some of these cases take years, my capital will be tied up, and I may have to close down,” Hira, a tax expert at Kody Africa LLP, explained.
If the claims are decided in taxpayers’ favor, Mr Yatani says the deposit will be repaid within 30 days.

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