The Equity Group is embroiled in a Ksh800 million tax tussle with the Kenya Revenue Authority (KRA) over transfer of assets to Equity Bank.
In a case filed in the High Court, KRA says that the money entails capital gains tax from asset transfers that it says were completed in January 14, 2015.
However, Equity Group argues that KRA affixed the date of transfer and tax demand wrongly on the alleged transfer of assets worth Ksh34 billion.
“It is a common ground that the transaction involved the transfer of the banking business from the respondent (Equity Group Limited) to a new subsidiary Equity Bank Kenya Ltd so that the respondent becomes a non-operating holding company of the Equity Group of Companies,” argued Equity.
Equity Group in its submissions says that it never benefited from transferring its assets to Equity Bank, hence should never be taxed.
“The respondent erred by failing to appreciate the distinction between what constitutes a transfer of property under the applicable laws and administrative procedures of effecting payment for the transfer,” said EGHL.
“It erred by misreading and misapprehending a clause of the applicant’s annual report on the basis of which he arrived at an absurd conclusion.”
Capital gains tax is levied on companies for transfer of assets situated in Kenya, acquired on or before January 2015.