Big blow for Estama in Sh150m tax arrears row

Estama Investments, the company at the centre of the Ministry of Health’s Sh1 billion mobile clinics scandal has suffered a blow after the High court allowed Kenya Revenue Authority (KRA) to collect over Sh150.9 million tax arrears from it.

Justice David Majanja allowed an application by the Commissioner of Tax demanding the money from the Chinese company, an amount agreed through alternative dispute resolution (ADR) on March 20, 2019.  

The Judge also lifted an order issued by the Tax Appeals Tribunal barring KRA from demanding the money from Estama Investments an amount agreed by the parties through ADR saying that the tribunal did not have jurisdiction to suspend its own proceedings and the proper place to seek such an order was the High Court.   

“I allow the appeal, set aside the ruling of the Tribunal dated March 31, 2020 and substitute it with an order allowing the Appellant’s (the Commissioner of Domestic Taxes) application dated December 30, 2019 to the extent that the Appeal before the Tribunal is settled in terms of the ADR Agreement dated March 20, 2019,” ordered Majanja.  

The parties entered into the alternative dispute resolution (ADR) mechanism culminating in an agreement wherein the parties agreed that the Estama Investments would pay corporate tax of Sh22,024,844 and VAT of Sh128,903,727.75. 

But after agreement was signed, Ethics and Anti-Corruption Commission (EACC) filed a case before the High Court seeking Sh400 million from the firm over the supply of the mobile clinics. 

The judge also ordered Estama Investments Limited to pay the cost of the appeal.