A tax agency boss has revealed that former President Uhuru Kenyatta’s ICT Ministry officials granted a Sh612 million tax waiver to a Chinese firm despite the rule that agency tax cannot be waived.
In 2019, the Chinese telecom giant Huawei was awarded a contract to build a data centre, smart city, and surveillance system in Kenya for Sh17.5 billion ($172.7 million).
The ICT Ministry and Huawei designed the Konza Technology City development project to include a cloud data centre, smart ICT network, smart traffic solution, and a State cloud and enterprise service.
According to Kenya Revenue Authority (KRA) acting Commissioner General Rispah Simiyu, a tax assessment of Sh1.43 billion in principal tax was raised against the ICT Ministry for failing to withhold and remit withholding tax on payments to project contracts undertaken by Huawei on behalf of the ministry.
“To settle the principal tax due, the Ministry of ICT and Huawei Technologies Ltd consulted on their own and agreed that Huawei will pay Sh812.66 million and the Ministry was to pay the tax balance of Sh612.66 million,” Ms Simiyu told the National Assembly Committee on Finance.
She noted that Huawei paid Sh812.66 million while the Ministry of ICT applied to Treasury to have the Sh612.66 million they were supposed to pay cancelled.
The committee, led by Molo MP Kuria Kimani, questioned why officials at the Ministry ‘forgot’ to withhold taxes.
According to Baringo North MP Joseph Makilap, the failure to withhold the funds was intentional and aimed at syphoning taxpayers’ money.
