High Court Extends Orders Barring the Implementation of the Finance Act, 2023
17 July 2023
High Court Extends Orders Barring the Implementation of the Finance Act, 2023
The High Court has upheld the orders preventing Treasury Cabinet Secretary Njuguna Ndung’u from implementing the Finance Act, 2023, after dismissing the government's application to lift the freeze. Justice Mugure Thande ruled on Monday that the CS failed to provide sufficient reasons to suspend the order, and after considering arguments from all parties, the balance favored the petitioners.
The Attorney General, Justin Muturi, had argued that the conservatory order would disrupt government operations and suspend crucial budgetary steps. However, the judge emphasized that the public would face prejudice if the suspension was lifted and the petitioners ultimately succeeded.
The extension of the suspension has further compounded the confusion regarding the fate of taxes collected unlawfully by the government since July 1, following the initial suspension. Immediately after the ruling, Attorney General Muturi requested a temporary suspension of the decision for a period of seven to 14 days, to allow him to seek a stay from the Court of Appeal. However, the judge rejected this plea. Meanwhile, Justice Thande granted a prayer for the case to be certified as raising weighty constitutional issues and referred the file to Chief Justice Martha Koome to assemble a bench for the final determination of the case.
This decision by the High Court adds another layer of complexity to the ongoing legal battle surrounding the implementation of the Finance Act, 2023. The extension of the freeze on the act raises questions about the continuity of government operations and the fate of taxes collected during this period. With the application for a temporary suspension denied, the government now faces the task of addressing the concerns raised by the petitioners and mounting a strong defense in the upcoming hearing at the Court of Appeal.
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CAPITAL MARKETS
Capital Markets Tribunal began hearings last week
The Capital Markets Tribunal began hearings on Wednesday for a multitude of long-pending cases that have been delayed due to a lack of quorum. One of the prominent cases awaiting resolution is the stalled acquisition of BOC Kenya by Carbacid Investments. Treasury Cabinet Secretary Njuguna Ndung’u appointed Mr Paul Lilan as the chairperson of the tribunal in May, and the team also includes members Constance Gikonyo, Godwin Wangong’u, and Paul Wanga, who will serve for a three-year term.
Aside from the high-profile Carbacid case, the tribunal has scheduled 12 other cases for mention before the five-member panel.
These include a matter involving former Kenol/Kobil boss Jacob Israel Segman.
On Thursday, the tribunal addressed 11 cases, including a case involving Zafrullah Khan and two others related to Chase Bank Ltd, a dispute involving Cytonn Asset Managers, and a case between Limuru Tea PLC and the regulator.
The establishment of the Capital Markets Tribunal and the resumption of pending cases mark a significant step towards resolving long-standing disputes in the financial sector. The tribunal's composition, with experienced members from diverse backgrounds, instills confidence in its ability to adjudicate complex matters effectively. It is expected that the hearings will provide much-needed clarity and closure to the litigants, enabling the capital markets to function smoothly and fostering investor confidence in Kenya's financial system.
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TAX
KRA to auction land in recovery of over sh 900 million unpaid taxes
Kenya Revenue Authority (KRA) has received approval from the Court of Appeal to auction a disputed piece of land in Nairobi in order to recover over Sh900 million in unpaid taxes. The court's decision comes after businessmen Mohammed Shehazan Butt and Yassar Butt failed in their application for an injunction to prevent KRA from disposing of the property. Mr. Butt claimed that he had purchased the land from the now-defunct Dubai Bank Ltd in 2013, only to discover that the KRA had placed a caveat on the parcel 10 months prior. The Court of Appeal ruled that the duo had not provided sufficient evidence to support their appeal, leading to the dismissal of their application.
The disputed land was originally owned by Come-Cons Africa Ltd, which borrowed a loan from Dubai Bank Limited in October 2012. When the company failed to repay the loan, the lender filed a case to recover its funds. The property was subsequently sold to Mr. Butt in 2012. However, the businessmen faced difficulties registering the property in their names, as Dubai Bank Limited did not possess the title documents and had reportedly applied for a provisional title.
According to KRA, an audit of Come-Cons Africa revealed that the company owed Sh900 million in taxes accumulated over nearly three decades. The tax authority conducted a tax audit for several financial years and issued an assessment of Sh901,535,418. A demand notice for tax assessment was sent to the taxpayer under the Income Tax Act. To secure the payment of taxes, KRA registered a caveat on the property on September 14, 2012. When the property was advertised for auction, KRA registered a caveat and notified its intention to sell the property in order to recover the outstanding taxes.
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EMPLOYMENT
Employment and Labour Relations Court to hear High-Stakes Dispute: Etihad Airways vs. Transport Workers Union Kenya
The Employment and Labour Relations court is set to hear a dispute between Etihad Airways and the Transport Workers Union Kenya, as the two parties failed to reach an agreement on a Collective Bargaining Agreement (CBA). Despite appearing before a conciliator, they were unable to resolve their differences. Justice Jacob Gakeri declined the union's request to refer the matter to the Ministry of Labour, citing the conciliator's report and specific recommendations on contested issues. The court's intervention is now sought to resolve the prolonged delay in concluding the CBA, which has been pending since December 2019.
The union and the airline have a Recognition Agreement in place, but negotiations for the CBA have stalled. Frustrated by the lack of progress, the union filed a case urging the conciliator to resolve the matter within a month. However, Justice Gakeri noted that since the dispute had already undergone conciliation and a report had been produced, further attempts at conciliation were unlikely to alter the parties' positions on the contested issues. As a result, the court has been called upon to intervene and provide a resolution to the ongoing impasse.
The outcome of this court case is eagerly anticipated by both the Transport Workers Union Kenya and Etihad Airways. The CBA holds significant importance for both parties as it defines the terms and conditions of employment, ensuring fair treatment and benefits for the workers. As the legal proceedings unfold, attention will be focused on the court's decision and the potential impact it may have on labor relations within the airline industry. The resolution of this dispute will not only affect the workers and the airline but may also set a precedent for similar cases in the future, emphasizing the importance of a balanced and cooperative approach to labor relations.
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COMPANIES
Equity partners with PROPARCO to support small businesses in DRC
Equity Group's unit in the Democratic Republic of the Congo (DRC), Equity BCDC, has partnered with Proparco, the private sector arm of Agence Française de Développement (AFD Group), to support small businesses in the central African country. Under the agreement, Proparco will provide a guarantee of up to €10 million (Sh1.55 billion) for loans to SMEs, with a particular focus on businesses owned by women and youth. This partnership marks the second guarantee scheme between Proparco and Equity BCDC, which is majority-owned by Equity Group.
The guarantee scheme aims to expand the financing options available to Equity BCDC, enabling it to increase its support for high-impact SMEs. The funds will help bridge the funding gap faced by small businesses, especially those affected by the Covid-19 pandemic. Equity BCDC plans to leverage this guarantee to provide financial assistance to more small firms and contribute to their resilience and growth in line with Proparco's 2023-2027 strategy.
This collaboration reinforces the commitment of both Equity Group and Proparco to promote economic development and empowerment in the DRC. By focusing on SMEs, particularly those owned by women and young adults, the partnership aims to drive inclusive growth and create opportunities for the underrepresented segments of the population. The previous guarantee scheme, 'Choose Africa Resilience,' implemented by Proparco in March 2022, has already played a vital role in supporting Congolese SMEs affected by the pandemic, and the new deal is expected to further enhance this support and extend it to more deserving small businesses.
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WHAT YOU MIGHT HAVE MISSED
EPRA reviewed the fuel prices for the next month
EPRA revised the July to August petroleum prices this week. The new prices are:
Super petrol is down by Sh 0.85 to Sh195.53, Kerosene is down by Sh 3.96 to Sh 179.67 while Diesel remains unchanged at Sh 169.48
UK Announces Visa Fee Increases
The UK announced an increase in Visa fees. Work and tourist visas will see a 15 percent increase, while other visa categories will face hikes of at least 20 percent. Additionally, the immigration health surcharge will surge from £624 to £1,035 per year. The news has raised concerns about the potential hindrance it may pose to the UK's global talent pool and its reputation as an attractive destination for skilled workers and artists.
Possible lower cost of fuel in Kenya?
Energy and Petroleum Cabinet Secretary Davis Chirchir on Tuesday told lawmakers that Kenya had struck a deal with the three Gulf oil majors to lower the cost of the fuel supplied on credit to shield consumers from missing out on the global drop in fuel prices.
According to the Cabinet secretary, the deal was struck last week but did not reveal the new premiums that will be charged for the remainder of the contract.