The High Court has ordered Thomas De la Rue to pay the taxman Sh1.1 billion in taxes, dealing a blow to the currency-printing firm that had fought off the amount.
De La Rue Currency and Security Print Limited had filed an appeal to challenge a previous ruling by Tax Appeals Tribunal that had ordered the company to pay Kenya Revenue Authority (KRA) the amount.
The tax claim arose from a contract the company has with the Central Bank of Kenya (CBK) after the KRA conducted an audit of the firm's tax affairs between 2013 and 2017.
The Tribunal had on June 4, 2021, ruled that De la Rue, which is registered and earns income in Kenya, had signed a contract with CBK to print currency and could not offset royalties paid to its parent company De La Rue International as an allowable expense under Section 15(1) of the Income Tax Act.
De La Rue is a limited liability company incorporated in Kenya and part of the De la Rue Plc Group, headquartered in Basingstoke, UK.
The company had disputed that it paid royalties to De La Rue International for services rendered to it, and therefore no taxes were due on its income.
KRA told the court that the company had entered into a contract with CBK and that the firm bore significant risk in the agreement.
According to the taxman, no intellectual property rights arose to warrant payment of royalties.
The High Court agreed with the Tribunal's ruling stating that the appeal lacked merit and there was no evidence to persuade it to overturn the judgment.
In 2019, the government closed a joint venture agreement with De La Rue where the state paid Sh700 million for a 40 percent stake in the company.
