Kenya Revenue Authority (KRA) has been barred from collecting a 25% tax in a row with a Tanzanian businessman.
The businessman, who owns Kioo Limited, had sued the taxman at the East African Court after KRA imposed a 25% tax on all imported glass bottles.
In the suit, the company claimed that the state and the taxman were discriminating against imported glass bottles unlike those manufactured in Kenya.
It also alleged that the law, which was to take effect beginning March 2021, did not exempt imports from East Africa.
“The company was likely to suffer an unquantifiable reputational injury which would erode its business goodwill built over 50 years thus occasioning a reduction in its market outreach,” Kioo Limited attorney's argued.
In its defence, the state, though National Treasury Principal Secretary Julius Muia, argued the law had been adopted to protect the domestic glass manufacturing industry.
He further noted that cheap imported glass bottles had flooded the market.
In their ruling, a three-judge bench consisting of Monica Mugenyi, Audace Ngiye and Charles Nyachae suspended KRA's imposition of the tax on the Tanzanian firm.
The court, however, noted that the suspension did not apply on all the other companies, only on the Tanzanian firm.
“It would thus appear that justice lies in the protection of the applicant from expenses that would have an exponential bearing on its business operations yet might not be readily recoverable from KRA, an institution of the respondent,” ruled the judges according to The Standard.
The bench also observed that KRA would not suffer as much loss when the decision is applied to one company.
They also noted that the suspension would remain in place until the case is heard and determined.
