Former Nairobi governor Evans Kidero will have to part with Sh427 million unpaid tax that he used during his gubernatorial campaigns in 2015.
This is after the Milimani commercial court judge David Majanja set aside a decision of the Tax Appeals Tribunal which found that the evidence provided by Kidero to prove source of the funds was sufficient.
Kidero claimed he had received the monies from donors as political campaign funds which are not chargeable to tax.
The commissioner of investigations also agreed with Kidero that funds raised for political party campaigns are not chargeable to tax.
But Majanja said the burden of proof lay on Kidero to demonstrate that the funds were utilised for that purpose.
The tribunal said Kidero had discharged his burden of proof by showing the source of the funds and that it was up to the commissioner, who was conducting investigations, to follow up on the sources of funds. Kidero had provided a list of contacts to prove the same.
The tribunal further said the commissioner had the tools to investigate and authenticate Kidero’s claims.
After being dissatisfied with that decision, the Kenya Revenue Authority filed the matter before the Milimani commercial court.
The commissioner of investigations and enforcement complained that the documents produced by Kidero, which included a number of lists with telephone numbers and invitation cards, did not explain or show anything other than basic telephone contacts.
The commissioner added that the sample invitation cards are not proof of campaign funds.
The commissioners further argued that Kidero did not provide the necessary documents to show that political campaign funds were separate from his personal account.
It argued that in the absence of documentary evidence that the amounts in question were campaign funds and were used solely for the purpose of carrying out campaigns, it was entitled to treat the amount as income attributable to Kidero hence taxable.
Justice Majanja said he scrutinised the documents provided by Kidero. The list provided shows names and telephone numbers of persons who Kidero alleges contributed to his political campaign.
“It does not show how Kidero collected from each donor much less that he collected Sh423 million from the people named on the lists,” Majanja said.
“I come to the conclusion that Kidero failed to discharge his burden as the evidence on record could not support such a conclusion reached by the tribunal,” he added.
Majanja faulted the tribunal for imposing on the commissioner the burden to disprove Kidero’s contention that the Sh423 million was election campaign contributions when he had not provided sufficient evidence to establish the source of income.
The commissioner conducted an audit of Kidero’s financial and business affairs for the income period of January 2011 to December 2015.
It then hit him with a tax liability of Sh680 million which Kidero challenged and was reviewed to Sh427 million.
The commissioner then charged Sh74 million on one of Kidero’s property, Vista Investments Limited, on the ground that it was not possible to determine its source of funding. It was taxed as an undeclared source of income.
Kidero argued that he received the Sh74 million as a loan to purchase the property.
But Majanja rejected his explanation, saying he did not provide any evidence to show he had taken a loan.
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