The Kenya Revenue Authority (KRA) has opened a fresh court battle against economist and government critic David Ndii over unpaid taxes.
The taxman has issued a notice to the High Court indicating its intention to appeal a decision of the Tax Appeal Tribunal to drop KRA’s pursuit tax money it is demanding from the economist.
KRA issued a notice to Dr Ndii in December 2017 demanding a total of Sh11, 395,591 arising from income tax estimated Sh8.4 million and another Sh2.9 million arising from VAT, triggering a dispute at the tribunal.
The income tax dispute was settled in an out-of-court deal while the Sh2.9 million VAT claim was later reduced to Sh2.8 million.
However, the tribunal declared the VAT claim invalid since KRA had used the wrong procedure to notify Dr Ndii of his tax dues. Now, KRA has moved to the High Court as it is dissatisfied with the verdict of the tribunal.
The legal dispute looks set to raise questions on the costs KRA will face, including legal fees, in its pursuit of the Sh2.8 million.
In March, the tribunal chaired by Josephine Maangi dismissed the assessment by KRA and quashed a demand of Sh2,807,758. In the ruling, the tribunal said that although Dr Ndii did not contest the assessment of the VAT, KRA had erred by failing to notify him through writing, a mandatory requirement.
The tax assessment was carried out in September 2015 at a time when Dr Ndii had stepped up his criticism of the Jubilee administration and President Uhuru Kenyatta.
He was at the time a prominent strategist for the opposition National Super Alliance (Nasa), which was being led by ODM leader Raila Odinga.
Dr Ndii has since fallen out with Mr Odinga after the opposition leader reached a truce with President Kenyatta. KRA demanded that Dr Ndii pay VAT because his business had annual gross earnings that surpassed Sh5 million.
Dr Ndii was not registered as a VAT agent and KRA went ahead and listed him, prompting the Sh2.8 million demand.
The tribunal ruled that KRA had erred in registering Dr Ndii without first notifying him.
“The tribunal notes that there is no documentary evidence to show that the respondent (KRA) wrote to notify the appellant about the registration and cannot therefore retroactively demand for tax for the period under review,” it ruled.
The tribunal heard that KRA had accessed Dr Ndii’s bank accounts to establish his financial dealings. Banks now form a key plank in KRA’s latest approach that emphasises on data gathering from third parties like the motor vehicle registration unit, property approval agency and Kenya Power bills in the war against tax evasion.
The information sought includes account balances and flow of income. This enables authorities to check whether taxpayers have correctly declared their income.
The Tax Procedures Act compels all such third parties to share information with the taxman. Those that defy KRA’s orders are liable to a fine of Sh1 million or a jail term of three years or both should they fail to provide details to the taxman.
KRA continuously overtaxes Kenyans, sets unrealistic goals on tax targets, plays preferential treatment to well connected Kenyans and at the end of the day, comes back to whine about failing to meet its idiotic targets. Its a cycle of madness that will end in tears.