Kidero off hook after settling Sh19m tax claim

Former Nairobi Governor Evans Kidero has now been cleared by the court after settling a Sh19 million tax claim.

The move followed a consent the former governor entered with the Kenya Revenue Authority (KRA), which had initially slapped him with a Sh427 million claim. The initial claim was in connection with the payment of taxes for donations Kidero received during his political campaigns in 2017.

In the decree recorded at the Court of Appeal, Kidero and KRA, reached an agreement that he pays Sh19 million inclusive of a penalty of Sh2,407,796 and interest of Sh5,036.405 million.

Kidero paid the money after renegotiating the colossal tax claim of Sh427,269,795.00 which KRA had slapped him with for the period covering 2011, 2012 and 2015.

According to the consent filed in court, Kidero cleared the last payment of Sh12,038,942 on August 23 being the principal tax claim following the review.

ADR Agreement

“By consent of the parties pursuant to the Alternative Dispute Resolution Agreement dated  August 4, 2023, the appeal herein lodged by Kidero be marked as settled under the following terms: that the additional income tax assessments for the period 2011, 2012 and 2015 amounting to Sh427,269,795.00 has been revised to Sh19,489,183.00 comprising Principal Tax of Sh12,038,982.00, penalty of Sh2,407,796.00 and Interest of Sh5,036,405.00,” states the consent signed by Kidero’s lawyer James Ochieng Oduol and KRA lawyer Leparashao Naeku Patricia.

The dispute began in 2016, when the KRA audited Kidero’s financial and business accounts from January 2011 to December 2015 and slapped him with a Sh680 million tax bill including penalties and interest.

He challenged the taxation at the Tax Appeals Tribunal, claiming that Sh427 million of the money were campaign donations.

However, after the tribunal ruled in favor of Kidero, the taxman lodged an appeal at the High Court, which ruled that he lacked proof that the money came from his campaign accounts and allowed the KRA to collect the disputed amount.

Failed to discharge

Mid-last year, Justice David Majanja while overturning the tribunal’s decision also agreed with the KRA that Kidero failed to discharge his burden showing that the Sh427,000,000.00 he received was political campaign contributions.

“Consequently, the Tribunal erred in imposing on the Commissioner the burden of disproving the Respondent’s (Kidero) contention that the Sh427,000,000 was election campaign contributions when he had not provided sufficient evidence to surmount his obligation to establish this source of income. The judgment of the Tax Appeals Tribunal dated March 6, 2017 be and is hereby set aside,” Justice Majanja ruled.

Kidero had claimed that he had received the monies from donors as political campaign funds which are not chargeable to tax.

Aggrieved by the High court’s decision, Kidero lodged an appeal in the Court of Appeal where he stated that Majanja was mistaken in finding that he did not provide evidence to show that the campaign donations received in his account was disbursed in campaigns despite acknowledging that it can be difficult to document most campaign expenses considering the nature of political campaigns in Kenya.

Supporting documents

In a set of documents filed at the Court of Appeal, Kidero argued that Justice Majanja blundered in reaching the conclusion that he ought to have provided receipts supporting campaign expenditure which include activities like fundraisers, mobilization and donations which are essentially in cash.

“The judge misapplied the law by placing an obligation ordinarily placed on businesses to keep accurate expense records with receipts despite acknowledging the expected difficulty in providing receipts for political campaign expenses,” he argued.

 Kidero faulted the Judge for ignoring the peculiar circumstances of election campaigns in Kenya being that most expenses are disbursed in cash but instead placed an unreasonable burden on him.

He further argued that KRA had the liberty to confirm that the Sh427 million was collected from the list he provided with telephone numbers of the contributors.

He also criticised the judge for  finding that the investigations into the political campaign funds was fair despite evidence of discrimination. Kidero says  no other political aspirant was subjected to taxation of political campaign funds.