Former Nairobi Governor Dr Evans Kidero has been ordered to pay tax of over Sh400 million to the Kenya Revenue Authority (KRA).
This is after he failed to prove that the funds were raised and used for campaigns as he vied for the Nairobi gubernatorial seat.
Audits established that the proceeds from Dr Kidero’s fundraisers were being deposited together with other business proceeds into his personal bank accounts.
High Court Judge David Majaja ruled that the burden of proof lay on Dr Kidero to demonstrate that the funds raised for campaigns were actually utilised for that purpose. And if so, it would not constitute taxable income.
On the other hand, if the money was retained or diverted to his own personal use, it would be taxable income to him and liable to income tax.
When tasked to avail a bank account for his campaign funds, Dr Kidero furnished the Commissioner with names of various contributors and a single-page document titled ‘Statement of Receipts and Expenditure’ indicating the monies received and expended on various items.
Dissatisfied with this information, the Commissioner raised a tax assessment for Sh427,269,795 precipitating an appeal at the Tax Appeals Tribunal (TAT).
The Tribunal returned a verdict in favour of Dr Kidero holding that he had shown the source of the funds and that it was up to the Commissioner to establish if the funds had been utilised for the campaigns, thus shifting the burden of proof to the Commissioner.
The Commissioner, aggrieved by the judgment of the Tribunal moved to the High Court on appeal challenging the holding by the Tribunal.
Justice Majanja faulted the Tribunal’s judgement and held that the burden of proof was on Dr Kidero to demonstrate that the funds raised for the campaigns were actually utilized for that purpose. This would not constitute taxable income.
On the other hand, if the money was retained or diverted to his own personal use, it would be taxable income to him and liable to income tax.
Having failed to discharge this burden, the Court held in favour of the Commissioner and allowed KRA to proceed and recover the sum of Sh427, 269,795.
