Three companies have sued the Kenya Revenue Authority for tax refunds amounting to Sh1.2 billion.
Finlays Horticulture Kenya Ltd, James Finlays Kenya Ltd and Jet Flowers Ltd have filed a case at the High Court in Nairobi seeking an order to force the taxman and the minister for Finance to pay the refunds.
They accuse the taxman of delaying tax refund claims.
The firms dealing in cultivation and exportation of agricultural produce also want the refunds in form of Value Added Tax released to them at 26.8 per cent.
They want the taxman and the minister to give an undertaking in court that in future, it will process payment for the claims within 60 days from the date of filing.
They argue that their rights and fundamental freedoms in the Constitution have been violated by KRA and the Ministry of Finance by being denied access to their claims.
They have decided to seek the court’s intervention because KRA has allegedly given indications for refunds for the last 18 months, and not honoured them.
The refunds being sought are overdue by five years.
The managers of the two companies held a meeting with the minister for Agriculture, Dr Sally Kosgei in November 4, 2011 and wrote a letter to then Finance Minister Uhuru Kenyatta over the issue but to no avail.
Cash flow constraints
“The huge outstanding VAT refunds have resulted in severe cash flow constraints and the petitioners are bearing an exceptionally high interest burden associated with unrecovered input,” the companies state in the documents.
Failure by the taxman to refund the cash has also resulted in severe lack of working capital, financial distress and huge damage to their flowers and horticulture businesses, which are capital intensive.
Due to this, the firms fear they may be reduced to cut their work force of 22,000 employees.
They contend that wrongful withholding of the large amounts by KRA and the interest rates on the sums amounts to deprivation of their property caused by the taxman and the Finance minister in breach of the Constitution.
The taxman is yet to respond to the case.