KRA settles Sh2.5 billion tax dispute with sugar importer

What you need to know:

KRA in a statement revealed that it reached out of court settlement with Darasa Investment which will now clear the Sh2.5 billion duty and VAT arrears.
The tax was subject of a long running court battle, and Supreme Court in May stopped KRA from demanding the sh2.5 billion from the sugar importer.
Darasa Investment had contested the tax arguing that it brought it in during the tax waiver period granted last year and accused the taxman of discrimination.

Kenya Revenue Authority has agreed to release 40,000 metric tons sugar owned by Darasa Investment Ltd that is at the centre of a Sh2.5 billion dispute.

KRA in a statement revealed that it reached out of court settlement with Darasa Investment which will now clear the Sh2.5 billion duty and VAT arrears.

The tax was subject of a long running court battle, and Supreme Court in May stopped KRA from demanding the sh2.5 billion from the sugar importer.

Darasa Investment had contested the tax arguing that it brought it in during the tax waiver period granted last year and accused the taxman of discrimination.

“The Kenya Revenue Authority (KRA) has agreed to release 40,000 metric tonnes of sugar owned by Darasa Investment Ltd in an out of court settlement. The agreement shall be guided by a consent signed by KRA and Darasa lawyers, ensuring that Darasa Investment Ltd clears the Sh2.5 billion duty and VAT arrears,” reads the statement.

The taxman further indicated that the firm is required to settle a Sh547,846,969 in ninety (90) days if waiver of interest and penalties is not granted as per the East African Community Customs Management Act.

The entry of the sugar into the country will be subject to further clearance from Kenya Bureau of Standards (KEBS), Port Health, Agriculture & Food Authority and the Radiation Board.

The agreement will lay to rest a bitter court battle.

In February, KRA lost the tax claim at the high court after Justice Eric Ogola ruled that Darasa Investment Ltd, was entitled to be cleared duty-free by the taxman and termed the decision by KRA to levy duty on it as unlawful.

The Judge ruled that he was satisfied that the sugar was loaded at a port in Brazil between May 12 and August 31, the period covered by tax waiver period, destined to Mombasa port as per the conditions set in a Gazette Notice.

But the decision was overturned by Appeal court prompting Darasa to move to Supreme Court.

KRA says it resorted to resolving the dispute through Alternative Dispute Resolution (ADR) as provided for in Article 159 (2)(c) of the Constitution, noting that so far the move has raised Sh8.3 Billion from 181 companies.