20 June 2012

Kenya: BIDCO Ordered to Deposit Sh200 Million in Tax Case

BIDCO Oil Refineries has been ordered by the High Court to deposit Sh200 million as security in a Sh1.3 billion tax dispute. Judge David Majanja directed the consumer goods manufacturing company to execute a bankers guarantee of the amount within 14 days. Judge Majanja said Kenya Revenue Authority should not demand the disputed money from the company but on condition Bidco furnish an irrevocable bankers guarantee from a reputable bank within two weeks.

The amount will act as security pending determination of the case. Judge Majanja said the case raises arguable issues that need to be resolved. Bidco moved to court to challenge a decision by KRA to levy distress against the company's property. KRA is demanding the amount as import duty, and with interests and penalties.

The manufacturing goods company moved to court on April 27 after receiving notice from KRA wanting to attach the company's bank accounts and properties to recover the money claimed. The company says the large sum of money is being unlawfully and unconstitutionally demanded from them.

Bidco also says the action by KRA would disable the operations of the company. The company said the demand by the tax man had no legal basis because the amount is disputed and has not been judicially determined. Bidco said attempts to have KRA reconsider its position had failed. The case will come-up for hearing on July 16.

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