KRA gives up Sh1bn claim on Bluebird Aviation

Times Tower in Nairobi, the headquarters of Kenya Revenue Authority (KRA). FILE PHOTO | DENNIS ONSONGO | NMG

Kenya Revenue Authority (KRA) has agreed to lift agency notices issued against Bluebird Aviation Ltd bankers over a tax demand of Sh1.08 billion.

In a consent adopted by High Court Alfred Mabeya on Wednesday, the taxman and the airline agreed to quash the agency notices issued on January 25, last year to the airline’s bankers directing them to pay the amount.

The consent said KRA recomputed the income tax for the airline for the financial years 2017 to 2022, which led to a reduction of accumulated losses to Sh348.6 million in the year 2021.

“Consequently, the respondent and the ex-parte applicant have amicably resolved their dispute and consequently, record the same by way of a consent order,” said the agreement.

Agency notices are issued by KRA to banks holding deposits on behalf of a taxpayer and result in the bank freezing such funds to enable it to recover its dues.

The airline went to court last year seeking to stop the collection of the taxes arguing that no assessment of its books has been done to warrant the demand.

Bluebird said the move had threatened to stall its operations. It said the demand is illegal because it has never been informed of any review of its tax records.

“The agency notices have paralysed the ex-parte applicant’s operations by having numerous cheques dishonoured, cancellation of credit facilities, loss of business due to none payment of fuel supplier, penalties due to late payment of general suppliers, damage to and loss of reputation and goodwill, inability to pay PAYE, NSSF, NITA and the statutory penalties and has already lost competent and long-serving specialised personnel,” the company said in the petition.

Bluebird said it has always paid taxes due and filed returns on time and that the KRA owes it Sh539 million in rebates that accumulated between 2016 and 2020.

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