The Kenya Revenue Authority (KRA) has been dealt a blow after it was barred from demanding Ksh73 million tax reportedly debt owed by a local car manufacturer.
A report by Business Daily on Monday, March 3, indicated that the taxman had been pursuing the said tax debt from Mobius Motors, a matter that spilled to the courts after the manufacturer reportedly ran into financial headwinds.
Mobius company had filed a suit laying bare its financial troubles in an attempt to be shielded from the tax demand.
It argued that it would suffer immense losses if an earlier tribunal allowing the taxman to pursue the debt is not stopped.
The company through it lawyers further argued that due to its dire financial situation, it risked collapsing and shutting down if KRA continued with its push to recover the monies.
In the report it provided to the court for the financial year ending December 2019, the company had liabilities of Ksh434 million, and owed its shareholders up to Ksh204 million.
By August 2020, the situation had worsened with liability rising to Ksh649 million.
In his ruling, Justice Francis Tuiyott barred the taxman from executing a Tax Appeals Tribunal decision dated July 30, 2020, that allowed it to seek the debt.
“Looking at the audited reports produced, Mobius has made out a strong case that a payment of Ksh 73,235,647 from its resources would most probably have an adverse effect on its operations. That would be substantial loss,” stated the Judge.
Tuiyott also gave Mobius Motors a 60-day ultimatum to provide a bank guarantee of Ksh 40 million as it awaits a ruling on its appeal.
The company set up shop in Kenya in 2014, and has since manufactured 80 test vehicles.
The company is a subsidiary of the Mobius Motors Limited UK.
