Chinese firm settles Sh2.2 billion tax row

A Chinese company has settled a Sh2.2 billion tax row with the Kenya Revenue Authority (KRA) in a deal that saw it pay Sh100 million upfront pending further assessment.

Housemart Co Limited, an importer of a range of goods including construction materials and household commodities, has filed the consent with the KRA at the High Court.

The consent allows Housemart to contest the outstanding tax as per the law.

The firm had moved to court after KRA froze its bank accounts demanding Sh2.2 billion tax arrears amid allegations that it was using seven other companies to divert funds to reduce its tax obligations.

“The consent …is hereby adopted as an order of the court. The (temporary) orders herein are accordingly vacated and the file is marked as closed,” ordered Justice Paul Nyamweya.

KRA agreed to withdraw all preservation orders issued to banks blocking the Chinese firm from transacting its accounts.

Although the dispute has left the court for now, it might head to the Tax Tribunal since the agreement allows the firm to follow the tax laws to contest the tax assessment.

Housemart had in court papers denied any alleged malpractice, noting that the caveat placed on its bank accounts had crippled its operations.

It pleaded with the court to lift the freeze order.

The company got temporary reprieve after the High Court suspended KRA’s directive blocking its accounts.

The firm, whose offices are located on Mombasa Road, claims that it has no links with the companies that received the cash on its behalf, noting that some of them are its suppliers.

The firms are Colila Limited, Akubi Limited, Nkemm Limited, Obeset Kenya Limited, Sunda (Industrial) Company Limited and Wise Databank Limited.

According to KRA, the firms were registered by Housemart and received cash from sales proceeds on its behalf. KRA says deposits are made by the employees of Housemart, or by companies that provide cash in transit services contracted by Housemart.