Home News Selective KRA Tax Wars Breeding Toxic Business Environment, Sends Investors Away

Selective KRA Tax Wars Breeding Toxic Business Environment, Sends Investors Away

KRA is now demanding Ksh. 900 million tax from NCBA in a tax waiver deal that was procedural and done within the law

by Guest Editor
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NCBA

KRA has launched a war against NCBA bank, demanding 900 million from the bank on a whim. The fight between the Government of Kenya and NCBA Bank Kenya is not good for the investment sector in this country. Here is the genesis of the ugly fight between KRA and the bank.

In seeking to spur investments, the Kenyan government extended a blanket tax waiver so that businesses merge and increase their operating capacities. Among the beneficiaries of the blanket waivers was NCBA.

World over, many companies get exemptions to encourage investment. For example, tech companies like Amazon just got an exemption last month lifting the 30% local ownership caveat to set up in Kenya. The move is being hailed as a step to encourage investments.

Also see: How KRA tax wars are bad for investments 

Now, partly driven by toxic politics after a change of leadership, the government is backtracking on its waiver and is demanding payment of the waiver that was extended to NCBA. It must be noted that the demand is only for NCBA and not other businesses that benefited from the blanket waiver.

NCBA

Antony Mwaura, KRA Chairman

Now ask yourself, if you were to invest in Kenya, how sure are you that the policies and agreements you are to make with the government will stand after 5 or 10 years? Principally, a government transcends time, and should protect people and businesses through generations. What message is Ruto’s government sending to investors given that these waivers were done within the law? Will the waiver extended to Amazon be rescinded and demanded back after ten years if another leadership comes into power?

If GoK will revoke the tax exemption for CBA & NIC, then all exemptions should be revoked for that entire period. All firms that got the exemptions must be under that same hammer. Whatever operation it is must be made professional and not petty, tribal politics. This is not how to run a country like Kenya that has been the darling of global investors.

We must create the right business environment if we are to create the needed jobs for our young people. This is a wrong move that we all must condemn. You can’t revoke an exemption that was done within the law selectively. If it’s a review, review for all companies. Revoke all. Start afresh for all.

It’s not a matter of paying. It’s the principle being applied. The amount in question is Sh900M. In context, the bank paid Sh14B in taxes and Sh7B to shareholders last year. The issue here is whether KRA is being weaponized to fight select businesses.

If I’m an investor, and seeing how things are playing out with NCBA, I’ll ask myself if my waivers and agreements are only good as the current administration and not being convinced, I would rather invest in another country as many are doing. With such a trend, Kenya will not be able to move forward and other countries will quickly overtake Kenya as a business destination of choice.

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