A section of Kenyans have reacted with anger after it emerged that a bank owned by President Uhuru Kenyatta and his family had been exempted from paying stamp duty that would have seen KRA pocket at least Sh350 million.
Anger after Uhuru’s bank was spared from paying Sh350 million to KRA
Uhuru has shares worth 2.8 billion in the bank
The Business Daily on Monday reported that the suspended Treasury CS Henry Rotich had exempted the Commericial Bank of Africa (CBA) from paying share transfer tax in its merger with NIC Bank.
The two banks merged to form a new entity that will become the third largest bank in Kenya with CBA having 53 percent of shares while NIC will hold 47 percent.
It was not immediately clear why Rotich, a direct appointee of the President, made the decision.
President Kenyatta is one of the shareholders at CBA alongside his mother Mama Ngina and brother Muhoho Kenyatta. Their shares are under Enke Investments Limited which has a 24.91 percentage ownership in CBA.
The merger will create a bank with a market capitalization of Sh65 billion with Uhuru, Muhoho, and Mama Ngina each owning shares worth Sh2.8 billion each.
The law requires the payment of one percent stamp duty for transfer of unquoted shares such as those from CBA which is not listed at the stock exchange.
With CBA having 53 percent share in the merged bank, the value of their equity is about 35 billion – meaning that they would have paid tax of at least 350 million.
NIC shares are listed and their transfer is automatically exempted from the one percent tax.
Activist Boniface Mwangi is among those who have reacted with anger, terming the exemption as corruption.
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