Court halts KRA's bid to collect Kidero's millions

Former Nairobi Governor, Evans Kidero has been granted temporary relief in his ongoing tax dispute after the Court of Appeal suspended the Kenya Revenue Authority’s (KRA) efforts to collect a staggering Sh427 million in tax arrears from him. 

This decision comes after Kidero appealed a High Court ruling that had allowed KRA to seize the millions, following a tax audit that began in 2016.

The legal battle centres around KRA’s decision to impose taxes on funds that were initially meant for political campaigns. 

Kidero, who currently serves as chairperson of the Kenya National Trading Corporation (KNTC), faced a major setback in February 2022 when the High Court upheld KRA’s assessment and ordered him to pay Sh427,269,795.

The amount stemmed from an audit conducted by the Commissioner for Domestic Taxes, examining his financial affairs between 2011 and 2015.

In his application for relief, Kidero argued that the tax assessment was too burdensome and that he would face significant financial distress if the execution of the ruling were to proceed.  He told the Court of Appeal that the amount was astronomical and would cripple his ability to maintain his livelihood, his business interests, and his personal finances. 

Initially, KRA had assessed Kidero’s tax liability at Sh680 million, including penalties and interest. However, after a review, the amount was revised to the current Sh427 million. 

This tax claim emerged after KRA  found discrepancies in Kidero’s records, which they argued failed to demonstrate the proper use of the funds raised during his political campaigns.

Kidero, who denied any wrongdoing, subsequently appealed the High Court decision, arguing that political campaign funds should not be subject to taxation.

He also expressed dissatisfaction with the High Court’s requirement that he deposit Sh150 million as a condition for suspending the tax collection.

In contrast, KRA’s Commissioner for Investigations and Enforcement insisted that Kidero had failed to meet his legal obligations by not adequately proving the legitimacy of the campaign donations. 

However, the Court of Appeal, in a unanimous decision by Justices Kathurima M’Inoti, Dr. Imana Laibuta, and Mwaniki Gachoka, ruled in favour of Kidero. 

The judges found that the issues raised by Kidero in his appeal were serious enough to warrant further examination.  They granted an order to stay the execution of the High Court judgment, effectively halting any attempt by KRA to collect the disputed sum for the time being.