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Nairobi tycoon in Sh236m tax row over city buildings

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Times Tower, the headquarters of the KRA, in Nairobi. FILE PHOTO | NMG

Nairobi-based tycoon Rahab Mwihaki Karoki has challenged a Sh236 million tax demand from the Kenya Revenue Authority (KRA) following a review of her Family Signature Limited’s books of accounts.

Ms Karoki’s Family Signature Limited has asked the High Court to quash a Tax Appeals Tribunal ruling that allowed the KRA to demand Sh236 million in unpaid value added tax and corporate tax.

Family Signature claims that the tribunal’s decision was flawed, as it allowed the KRA to rely on estimates in determining how much was due to the taxman.

It adds that the tribunal allowed the taxman to shift goalposts by amending pleadings without permission from the panel.

The Commissioner of Domestic Taxes, the only listed respondent, is yet to respond to the suit.

The real estate firm, owned by Ms Karoki and her family, had admitted to owing the KRA Sh64 million and has now faulted the taxman’s move to rely on bank transactions to generate an estimate of due levies.

“The learned tribunal erred in law by allowing the Commissioner for Domestic Taxes to rely on an estimated assessment without due regard to the rules and principles on assessment on assessment of tax liability. The tribunal erred in law by allowing the respondent to amend its pleadings without leave of the tribunal as required under the Tax Appeals Tribunal Act,” Ms Karoki says in suit filings.

Family Signature owns Amber House in Nairobi’s central business district, a building it acquired in a swap deal with its previous owners. The deal saw Family Signature relinquish Information House, which is also in the city centre, to Amber House’s previous owners.

Ms Karoki’s family is also associated with Quran House and Brighton House, both in the Nairobi City Centre.

Family Signature’s lawyer Edwin Thiong’o has asked Justice Grace Nzioka to bar the taxman from enforcing the tribunal’s ruling.