Chinese companies awarded major contracts in the country may soon face tax compliance issues after a petition was filed in court seeking to compel the government to disclose tax exemptions, customs duty waivers, and other fiscal concessions allegedly granted to the firms since 2008.

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The petition filed at the Milimani High Court targets tax arrangements associated with major projects, including the Standard Gauge Railway (SGR), Nairobi Expressway, Thika Superhighway, and Lamu Port.

According to the petitioners, some of the tax-assumption arrangements embedded in contracts for Chinese-financed bilateral infrastructure projects have operated without sufficient public disclosure or published legal authority.

In their argument, the petitioners seek a declaration that such arrangements are unconstitutional when implemented without proper Legal Notices or other published instruments.

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"The Petitioners accordingly pray for Judgment against the Respondents jointly and severally for  A DECLARATION THAT the unpublished, contract-embedded tax-assumption framework operative in respect of Chinese-financed bilateral infrastructure projects, in particular the Standard Gauge Railway (Phases I and II), the Nairobi Expressway, the Thika Superhighway, the Lamu Port Project and any related project, is unconstitutional, null and void to the extent that it operates without published Legal-Notice authority, in violation of Articles 35, 201 and 210 of the Constitution," read part of the petition as seen by Kenyans.co.ke.

Among the key orders sought is an order compelling the government to publish in the Kenya Gazette all Legal Notices , Gazette Notices, administrative directives, and executive instruments through which tax exemptions, customs duty remissions, or other fiscal concessions were granted to Chinese-financed bilateral projects since January 1, 2008.

Failure to make such information public, they argue, violates the constitutional provisions on access to information, public finance and taxation.

At the same time, the petition also seeks that the court quash administrative directives and Treasury circulars allegedly used to operationalise the disputed tax arrangements.

The Kenya Revenue Authority (KRA) is also required to conduct a full audit of vehicles, machinery and other equipment imported duty-free since 2008 under Items 5, 6 and 10 of the Fifth Schedule to the East African Community Customs Management Act.

According to the petitioners, KRA is required to produce a verified inventory showing the items imported, their current location and their current users, arguing that the absence of adequate post-project tracking, auditing, re-exportation and usage restrictions could allow equipment brought into Kenya under duty-free arrangements to remain in use without proper oversight.

📰 Source: Kenyans.co.ke