President William Ruto is locked in a high-stakes political and financial battle with former President Uhuru Kenyatta and his family.
Making good on Kenya Kwanza leaders’ repeated assertions that the Kenyatta family and other leaders in the previous regime must pay taxes, which they accuse them of evading, the Kenya Revenue Authority (KRA) acting on a directive from the National Treasury is looking to claim taxes waived in the 2019 merger of CBA and NIC to form NCBA, and NCBA – in which the Kenyatta family holds a 13.2% stake – is fighting back.
In a letter dated March 24, Treasury Cabinet Secretary Njuguna Ndung’u directed the Kenya Revenue Authority to claim Capital Gains tax following the CBA-NIC merger. Former Treasury Cabinet Secretary Henry Rotich in 2019 exempted the transfer of CBA shares to NIC Bank from paying stamp duty of one percent of the value of unquoted stocks being transferred. Capital Gains Tax is charged on profit from the sale of property or an investment, with the KRA now looking to collect Ksh900 million.
In a case filed by NCBA, the High court on Thursday, April 27 issued temporary orders stopping the National Treasury from revoking the tax exemption. Lady Justice Mugure Thande further barred the taxman from executing the directive issued by Treasury CS Ndung’u to claim the taxes from NCBA bank.
The judge certified the matter as urgent, and ordered that petition papers be served to Attorney General Justin Muturi and Treasury CS Ndung’u by May 5. She further directed that responses to the petition and application be filed and served by May 19.
“We cannot continue to operate in a space where those in power exempt themselves from paying taxes. Their day is up. Every citizen must pay tax. Even if they sponsor demos so they don’t pay tax, they will pay,” Ruto had stated in January, with the sentiments echoed by Deputy President Rigathi Gachagua.
A Business Today analysis in March showed the family of former President Uhuru Kenyatta will receive a dividend of around Ksh835 million for the 2022 full year after NCBA announced a dividend per share of Ksh4.25, up from Ksh3 the previous year. NCBA saw profit after tax grow from Ksh10.22 billion in 2021 to Ksh13.78 billion in 2022
Challenging the revocation of the tax exemption, NCBA filed the case at the Constitutional Division of the High Court, arguing that the revocation and any subsequent demand for tax contravened its expectation that decisions granted by a government institution are final as stated in Article 47 of the Constitution. The bank maintained it was not involved in the decision making process leading to the revocation as it was never informed of any intentions to have the approval receded, nor was it represented.