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KRA reaches out of court agreement with Kidero, 'forgives' him Sh407M tax arrears

The tax man was seeking Sh427 million from the former Nairobi Governor

Former Nairobi Governor Dr Evans Kidero

Former Nairobi Governor Evans Kidero has been relieved of a significant tax burden amounting to Sh427 million as a result of an out-of-court settlement in a tax arrears dispute.

In a formal settlement agreement submitted to the Court of Appeal, Dr Kidero, who held the position of Nairobi's Governor from 2013 to 2017, secured an exemption of Sh407,780,612.

As per the documented agreement, the former governor is now responsible for paying only a mere Sh19,989,183 out of the total Sh427,269,795 that had been originally sought by the tax authorities.

Under the terms of the settlement, Dr Kidero will now only be required to pay a reduced sum of Sh19,989,183.

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This amount comprises the principal tax owed, which is Sh12,038,982, along with a penalty of Sh2,407,798.76 and an interest of Sh5,036,405.

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The legal representatives for Dr. Kidero, James Ochieng Oduol and Leparashao Naeku Patricia, filed the consent agreement in court.

They acknowledged that the interest component might change depending on any adjustments to the assessments in the iTax system and agreed to such variations.

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The court endorsed this out-of-court settlement between Dr Kidero and the Commissioner of Investigations and Enforcement at the Kenya Revenue Authority (KRA), effectively clearing him of the substantial tax arrears.

In the recorded consent agreement, Dr Kidero and the KRA agreed on a total payment of Sh19 million, which encompasses a penalty of Sh2,407,796 and an interest of Sh5,036,405.

This resolution marks a significant reduction from the initial tax demand of Sh427,269,795 that KRA had sought to collect for the years 2011, 2012, and 2015.

The dispute initially began in 2016 when the KRA audited Dr Kidero's financial and business records for the period spanning from January 2011 to December 2015, resulting in a tax bill of Sh680 million, inclusive of penalties and interest.

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Dr. Kidero contested this taxation at the tax appeals tribunal, asserting that Sh423 million of the owed amount constituted campaign donations.

However, after the tribunal ruled in his favour, the tax authority appealed to the Supreme Court, which determined that he could not provide sufficient evidence that the money originated from his campaign accounts.

Consequently, the KRA was permitted to collect the disputed sum.

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