Chase Bank Sues KRA Over Sh1.1B Unrefunded Tax

by Lawyer Alex

Kenya Revenue Authority (KRA) has been sued by defunct lender Chase bank, demanding Sh1.1 billion tax refund.

Chase Bank in its case before the High Court wants Kenya Revenue Authority (KRA) forced to refund the money paid as income tax in 2015.

The bank’s lawyer Issa Mansur argued that it has paid KRA the contested income tax in four equal tranches of Sh277 million.

According to him, the lender has reminded KRA several times to refund the money.

“The respondent was required under Section 47 (3) of the Tax procedures Act to make a decision on the application for refund within 90 days of the application being made by the first applicant (Chase),” argued Mansur.

The bank has sued KRA alongside the liquidator, Kenya Deposit Insurance Corporation (KDIC).

The Central Bank of Kenya placed Chase under receivership on April 7, 2016 and appointed KDIC as the receiver manager.

It emerges that the bank is in the last steps of folding up.

The lawyer stated that the liquidator is chasing the money to enable it refund Chase bank creditors and customers.

“The first applicant is in the process of being liquidated and it is of utmost urgency that leave be granted by this court to comment and proceed with the application seeking leave to apply for judicial review orders as well as the substantive judicial review application against the respondent to enable the liquidator pursue refund of the advance tax paid to utilize the same in meeting the obligations stipulated under Section 50 (9) of the Kenya Deposit Insurance Act,” added Mansur.

According to the lawyer, an audit conducted by Deloitte revealed that Chase Bank had a loss Sh742 million 2015.

The lender now argues that it should not have paid KRA money, as the law requires that one pay tax on projection of the income to be earned.

The initial amount demanded was Sh838 million. That was five years ago.

However, the money has attracted interest to Sh1.1 billion.

“The inordinate delay of more than five years by the respondents to process and refund the advance tax paid is unreasonable and violates the right to fair and expeditious administrative action,” Mansur stated, adding that KRA’s inaction as prompted it to pursue the money in court.

“The Tax Procedures Act requires the respondents to refund the overpaid tax within two years, failure to which interest at the monthly rate of 1 percent is payable.

“It has been 64 months since the application for refund was lodged and the respondent has failed to remit the overpaid tax. The applicants therefore claim interest on the sum of Sh1.1 billion at the rate of 1 percent per month,” Justice Jairus Ngaah heard.

The judge transferred the case to the commercial division.

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