Relieve to Kenyatta family as courts halt revocation of NCBA tax waiver
3 min read
Court temporarily halts decision by the National Treasury to reclaim tax waiver granted to NCBA bank
Court temporarily halts decision by the National Treasury to reclaim tax waiver granted to NCBA bank.
The decision by the National Treasury to revoke the tax exemption for NCBA bank has been temporarily resided by the High Court.
This came after the bank requested a court order to prevent the state from revoking the tax exemption.
National Treasury was claiming hundreds of millions worth of tax from the bank.
On Thursday, April 24, Lady Justice Mugure Thande issued a decision stating that the Application satisfied the requirements to be granted conservatory orders.
“I am satisfied that the Application has met the test for the grant of conservatory orders at this ex parte stage. Accordingly, Prayer 2 of the Application is hereby granted,” Justice Thande says.
“This matter is coming up on April 24 for directions on the Petition and Notice of Motion both dated April 26 before Honourable Justice M. Thande UPON considering the same; It is hereby ordered that: the Petition and Application are certified urgent and are to be served by May 5,”
NCBA bank is associated with President Uhuru Kenyatta and was formed after NIC Bank and Commercial Bank of Africa merged in 2019.
NCBA had filed a petition in court, seeking to bar the National Treasury and Economic Planning from implementing the revocation decision.
On March 16, 2023, Kenya Revenue Authority had written to the National Treasury, asking CS Njuguna Ndung’u to revoke the tax exemption on the transfer of shares, assets, and liabilities during the merger.
“The KRA Board during its special meeting held on March 2, 2023, resolved that the exemption of NCBA transaction from the Capital Gains Tax (CGT) be referred back to the National Treasury for consideration to determine whether there was any demonstrable public interest in the transaction,” the letter by Risper Simiyu, acting Commissioner General reads in part.
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CGT is the tax imposed on gains arising from the sale of property.
The National Treasury wrote a letter to NCBA on March 24, effecting the same.
On April 20, 2023, the bank communicated with the authorities, seeking an audience with them on the same.
The Treasury exempted the merged CBA and NIC bank from paying share transfer tax running into hundreds of millions of shillings in 2019.
It is estimated that the amount in dispute is approximately Ksh900 million.
Following the revocation, KRA has demanded about Ksh900 million plus interests in lieu of capital gains tax.
At the time, Henry Rotich was the National Treasury Cabinet Secretary, and he exempted the transfer of CBA shares into NIC Bank from paying stamp duty of one percent of the worth of the unquoted stocks that were being transferred.
The transaction took place through a share swap between the two banks, with NIC group shareholders owning 47 percent of the merged entity and CBA shareholders owning 53 percent of the merged entity.
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