NCBA Group PLC has said that it will appeal a High Court ruling that nullified the KSh 384.5 million stamp duty exemption granted during the 2019 merger between NIC Bank and CBA Bank that created Kenya’s third largest bank.
- •The judgment delivered by Justice Chacha Mwita on Friday nullified Legal Notice No. 112 of 2019 and accused the Treasury of bypassing statutory procedures.
- •NIC Group and CBA’s merger was executed through a share swap, which saw NIC shareholders take a 47% stake in the new entity while CBA shareholders, notably the Kenyatta family, holding 53%.
- •NCBA’s board has instructed legal counsel to file a notice of appeal, stating that the exemption was procedurally obtained and in the public interest.
“We intend to exhaust all available legal options to uphold this position,” NCBA Bank stated after the judgement.
The ruling points out that the legal notice by Former Treasury CS Henry Rotich exempting the transfer of unquoted CBA shares from stamp duty, saving NCBA an estimated Sh384.5 million, was unconstitutional and not made in the interest of the public.
“Having considered the pleadings and arguments by the parties, I come to the conclusion that the exemption was not made in public interest, thus violated the principle in section 106(1) of the Stamp Duty Act,” Justice Chacha Mwita ruled.
“The interest exhibited in the letter seeking exemption was more private than of public interest, thus violating Article 21 of the Constitution,” the ruling added.
Busia Senator Okiya Omtatah, who filed the petition against the stamp duty exemption, celebrated the verdict as a win for taxpayers, stating that the exemption was an abuse of power by politically-connected individuals who owned shares in the merged entity.
Omtatah argued that the tax waiver was not gazetted or disclosed to the public, therefore, the merged entity—a profit-making enterprise—ought to have paid the taxes.
“The Executive, through the National Treasury, had granted this exemption which bypassed the legal processes for tax matters making it unconstitutional. Thanks to the court’s decision, Legal Notice No. 112 is officially quashed, protecting the public purse from this unlawful tax evasion,” Omtatah said.
“This is a huge win for Kenya. We must stay vigilant and demand transparency,” he added.
The exemption has been political fodder for the Ruto regime, as the lender tied to the Kenyatta family was pinpointed as one of the businesses that enjoyed special provisions. In 2023, Former Treasury CS Njuguna Ndung’u revoked the exemption order and directed the Kenya Revenue Authority (KRA) to recover the tax precipitated by the merger.
NCBA bank obtained a temporary court injunction to hold the collection and argued that the reversal breached the lender’s constitutional rights.
