Atlas loses Sh241 million in tax dispute with Ethiopia
What you need to know:
Atlas claims the bill effected by the Ethiopian Revenue and Customs Authority (ERCA) is from a claim against Ardan Risk & Support Services which it acquired three years ago.
“The company has been advised by its local team in Addis Ababa that on May 10, 2016, ERCA summarily removed approximately $2.4 million from TEAP’s bank account with the Development Bank of Ethiopia,” the statement read in part.
Atlas Africa Industries has ran into a tax dispute with the Ethiopian government that has seen it lose Sh241 million ($2.4 million) from its subsidiary TEAP Glass Plc.
Atlas claims the bill effected by the Ethiopian Revenue and Customs Authority (ERCA) is from a claim against Ardan Risk & Support Services which it acquired three years ago.
In an update, Atlas said it received local legal advice that neither it nor TEAP has any liability for any such taxes under Ethiopian law.
“The company has been advised by its local team in Addis Ababa that on May 10, 2016, ERCA summarily removed approximately $2.4 million from TEAP’s bank account with the Development Bank of Ethiopia,” the statement read in part.
Atlas say it will ensure that the company’s funds are returned since the unilateral removal of these funds was unlawful and was in breach of an agreement reached with ERCA.
The firm has threatened to exert diplomatic and political pressure on Ethiopia to have the funds returned.
“The Board assures shareholders that it will take all available steps to ensure that the company’s funds are returned and the Board is currently exploring legal, diplomatic and political routes in order to seek redress,” the statement read.
The UK logistics firm had taken up stake in Ardan Risk & Support Services (ARSS) in 2013 which it used to acquire Ardan Logistics Kenya (ALK), a separate and new 'shell' company from which the restructured business would be operated according to the company fillings.
However last December, Atlas discontinued operations of its Kenyan subsidiaries ALK, Ardan (Civil Engineering) Limited and Ardan (Medical Services) Limited following a downturn in the oil and gas exploration sector that it said had significantly eaten into its margins.
According to a regulatory filing issued last month, Atlas said it made a net loss of Sh3.42 billion loss for the 18 months ended December 2015, largely blamed on costs of discontinued operations in Kenya.
The company had suffered a Sh1 billion loss in June due to reduced contracts from oil and gas exploration companies especially in Turkana, and made a decision to divert its resources from Kenya to Tanzania and Ethiopia.
Atlas in March inked a deal with Ethiopian Raya Brewery for supply of beer bottles which will be made at Atlas’ upcoming glass plant near Addis Ababa after raising $5 million (Sh501 million) in a private placement to finance the feasibility study and initial construction work for the glass plant.
