The Kenya Revenue Authority (KRA) has frozen bank accounts of Kenyan-based Chinese tile manufacturer Keda Ceramics.
Documents filed in court reveal that KRA has blocked the Chinese company’s access to two local bank accounts.
The company now is seeking court orders to lift the freeze, arguing that it has been unable to pay salaries to its 1,260 employees and meet commitments to its suppliers.
“An order to quash the decision and findings of the respondent as contained in its preservation notices dated October 22, 2018 issued to Standard chartered bank Kenya Limited in respect of funds held in the applicant’s account…and the applicant’s Barclays bank Kenya Limited accounts,” reads one of the applications by Keda Ceramics.
KRA’s letters to the banks which have been attached to court documents do not reveal the reason behind the action or even how much money it is demanding from the company.
The tax dispute comes at a time when the firm has announced that it is injecting an additional Sh2.5 billion investment in its Kenya operations.
Justice John Mativo yesterday directed KRA to file its response in five days and set the return to court to court on November 14 for highlighting of the applications.
The initial suit was certified urgent and KRA directed to file response and hearing set for November 7.
The firm says the initial order expired, but it was shocked when the banks told it that a fresh 10 working-days preservation order has been issued, prompting the firm to file the fresh application.
Keda Ceramics says KRA has never made any tax demand, noting that it is willing to cooperate with the taxman.
KRA in the letter to the bank states that it has issued the preservation pursuant to Section 43 of the Tax Procedure Act, 2015.
The section states that notice is issued if the commissioner believes that a taxpayer has made taxable supplies, has removed excisable goods, or has derived an income of which tax has not been charged or has collected tax that has not been accounted for and is likely to frustrate the recovery.