Anne Kananu faces KRA over City Hall's Sh3.49bn tax arrears

Acting Nairobi Governor Anne Kananu on Tuesday appeared before Kenya Revenue Authority (KRA) investigation and enforcement officers for question on Sh3.49 billion tax arrears.

The deputy governor was summoned to discuss payment of the debt following lack of significant progress in discussions between KRA and City Hall officials.

The arrears, for the period between 2011 and June 2020, arose from taxes deducted from county employees and suppliers, but which had not been remitted to the government through KRA, as required by law.

The arrears are Pay As You Earn (PAYE), withholding VAT, withholding tax, among others. The amount excludes penalties and interest amounting to Sh3.1 billion.

“The acting governor appeared at KRA on Monday afternoon and was briefed on the build-up of the unpaid taxes after a cat and mouse game through the weekend,” said a source at the aauthority. 

Figures disputed

City Hall has been disputing the figures by the taxman, saying reconciliation must be done to ascertain the total.

Acting County Secretary Jarius Musumba, in a letter dated June 10, noted the need to ascertain the state of City Hall’s account at KRA.

This, he said, was duly affirmed during a meeting between KRA and the county government two weeks ago.

“The parties agreed that a reconciliation of accounts be undertaken to ascertain the true position of the county government's account at KRA," the letter says.

“The governor holds the position that until this is done, she is unable to adequately respond to the allegations."

Kananu warned

To settle the matter, KRA wrote to City Hall on various dates including April 27, May 12 and June 3, summoning Ms Kananu.

The acting City Hall boss failed to honour the summonses, instead requesting an extension in all the instances.

“It is on record that on both instances you sought the indulgence of this office for extensions which were respectfully granted. However, up to now there is no indication of your intention to honour the summons as lawfully issued by this office,” said Mr Dominic Kengara.

In the April 27, 2020 letter, KRA said they had opened investigations into tax affairs of City Hall for failure to remit Sh3.49 billion in withholding income tax, withholding VAT and PAYE, among others.

Subsequently, the authority summoned Ms Kananu to appear before it to shed light on the action by her administration.

The DG was further warned that legal action would be taken against her should she fail to appear before the commission as that would amount to a violation of tax laws.

“Resulting thereform, the Commissioner has the reason to believe that you, Ann Kananu, are culpable, connected to or have information that will assist us in our investigations into the identified offences,’ said the letter by Kengara.

But Mr Musumba would request for yet another postponement of the June 10, 2021 meeting to await for the outcome of the reconciliation process.

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