KRA now ordered to release Airtel equipment in tax row

The Kenya Revenue Authority (KRA) has been ordered to release Airtel Kenya’s equipment that the taxman had detained on suspicion that they are meant for TV and radio and not voice calls as declared in import documents.

Justice Chacha Mwita issued the order concerning the dish-like parabolic antennae, held at the port of Mombasa subject to Airtel providing a bank guarantee for the disputed tax amount.

KRA reckons that the equipment is for broadcast and therefore attracts different taxes from those of phone communication, an argument that Airtel says is unfair, unreasonable and it stands to lose because its business operations will be grounded.

“Prayer 5 of the Notice of Motion is hereby granted pending hearing and determination of the petition subject to the petitioner issuing a bank guarantee for the difference,” ordered Justice Mwita.

The value of the equipment or the tax in dispute is, however, not disclosed in the suit papers.

Airtel had proposed to pay the tax based on the tariff structure applicable for voice call equipment and offered to provide a bank guarantee for the difference pending determination of the suit.

But KRA rejected the proposal, asking the firm to pay based on the reviewed tariff, arguing that if the outcome of the petition was in favour of Airtel the surplus payment could be applied to future imports.

The mobile service provider is aggrieved by seizure of the equipment, claiming that completion of some of its projects have delayed as a result.

Airtel is upgrading its network to match rising user needs that have seen it gain market share, eating into market leader Safaricom’s turf.

Airtel’s subscribers rose 11.9 percent translating into a market share of 21.4 percent in the quarter ended June, as per the regulator Communication Authority of Kenya data.