A Chinese company has sued the Kenya Revenue Authority (KRA) for freezing its accounts over Sh2.2 billion tax arrears.
Housemart Co Limited, an importer of various items including construction materials and household commodities, is accused of using seven other companies to divert funds in order to reduce the tax obligations.
While denying any link to the alleged malpractice, the firm noted that the caveat placed on its bank account has crippled its business operations and pleaded with the court to lift the freeze order.
“An order of certiorari to remove to the High Court and quash the decision of the respondents contained in its preservation notices dated September 28, 2018 and October 1, 2018 respectively issued to NIC Bank Limited #ticker:NIC, Bank of Africa and Standard Chartered Limited #ticker:SCBK account in respect of the applicant’s accounts,” reads one of the order sought by the firm.
The firm, whose offices are located on Mombasa Road, claims that it has no link with the companies that received the cash on its behalf, noting that some of them are its suppliers.
The firms are Colila Limited, Akubi Limited, Nkemm Limited, Obeset Kenya Limited, Sunda (Industrial) Company Limited and Wise Databank Limited.
According to KRA, the above companies were registered by Housemart Co Limited and they receive the cash from sales proceeds on behalf of Housemart
The documents filed in court indicate that the KRA followed the money trail and assessed the deposits in these companies’ accounts, which revealed that the firm has not paid Sh2,243,781,488 tax.
KRA says the deposits to the accounts of these companies are made by the employees of Housemart, or by companies that provide cash in transit services contracted by Housemart.
The tax evaded covers income tax and valued added tax (VAT) for the years 2015 to 2017.
For instance, a total of Sh515 million was deposited and Akubi Limited received Sh241 million, and Wise databank Limited received Sh3.5 billion over the two years.