Kenya: High Court Orders Kidero to Pay KRA Sh427 Million in Taxes

Nairobi — The High Court has ordered former Nairobi Governor Evans Kidero to pay the Kenya Revenue Authority Sh427.2 million in taxes after an audit into his financial and business affairs.

This follows a ruling made by justice David Majanja who pointed out that despite the former governor and the Commissioner reaching a consensus that funds raised for political party campaigns are not chargeable to tax, both parties failed to agree on whether Kidero who was then vying for Nairobi gubernatorial seat had demonstrated the funds so raised had actually been expended in political campaigns.

Audits carried out by the Commissioner established that the proceeds from fundraisers by the former governor were being deposited together with other business proceeds into his personal bank accounts.

When tasked to avail a bank account for his campaign funds, Kidero furnished the Commissioner with names of various contributors and a single page document titled ‘Statement of Receipts and Expenditure’ indicating the monies received and expended on various items.

Dissatisfied with this information, the Commissioner raised a tax assessment for Sh427,269,795.00 that precipitated an appeal at the Tax Appeals Tribunal (TAT).

The Tribunal returned a verdict in favour of Kidero holding that he had showed the source of the funds and that it was up to the Commissioner to establish if the funds had been utilised for the campaigns, thus shifting the burden of proof to the Commissioner.

The Commissioner, aggrieved by the judgement of the Tribunal moved to the High Court on appeal challenging the holding by the Tribunal.

In his judgement, Majanja faulted the Tribunal’s judgement and held that the burden of proof was on Dr. Kidero to demonstrate that the funds raised for the campaigns were actually utilized for that purpose.

This would not constitute taxable income. On the other hand, if the money was retained or diverted to his own personal use, it would be taxable income to him and liable to income tax.

Having failed to discharge this burden, the Court held in favour of the Commissioner and allowed KRA to proceed and recover the sum of Sh427, 269,795.00.