Sony Holdings, the owner of Westgate Shopping Mall, has taken legal action against the Kenya Revenue Authority (KRA) over a Sh1.1 billion tax claim. The Authority claims that the company owes it Sh751 million in corporation tax, Sh390 million in value added tax, and Sh25 million in withholding tax.
The company, through its lawyer George Oraro says KRA is inconsiderate of the losses it made after the 2013 terrorist attack. Oraro argued that the company incurred Sh7.2 billion in losses attributed to rent loss and damages.
Sony Holdings received Sh600 million from Kenindia Insurance and allegedly used Sh4.4 billion to reconstruct the mall.
“From the period of terrorists’ attack to date, the respondent abused its powers to assess and collect the tax as provided in law, subjected the applicant to numerous arbitrary tax assessments, which have bogged down the applicant and which are oppressive, wanton and unfair,” Oraro argued.
The firm had asked the Treasury’s Cabinet Secretary Henry Rotich to exempt it from paying taxes due to the incurred losses. An earlier audit had also indicated that the company had paid all its taxes and the Authority owed Sh33.1 million in a tax refund for 2012 to 2014.
The company had also been told that it would be exempted from taxes if it constructed the neighbouring roads and drainage facilities. This has not happened even after it used millions of shillings to construct Peponi and other roads.
“Having variously confirmed by two audits that Sony Holdings had properly declared all its income and expenses and properly excluded the Sh600 million received as compensation for loss of buildings and outbuildings from corporation income, the [KRA’s] sudden about-turn over the matter claiming tax over the same as corporate income is an unbridled violation of Sony Holdings’ right to legitimate expectation,” Sony Holdings director Alex Trachtenberg said in the court filings.
Sony Holdings opened the mall in 2015 and it is still reconstructing some of the sections that were destroyed during the attack where 67 people were killed.
