The Kenya Revenue Authority (KRA) has announced that it is abandoning its claim for KES 400 million from SBM Bank, a commercial bank operating in Kenya. The decision follows a lengthy legal battle between the tax authority and the bank, which has been ongoing for several years. The dispute began when the KRA accused SBM Bank of failing to remit taxes on behalf of several companies, including KenolKobil, a petroleum distributor, and Safaricom, a telecommunications company. The KRA claimed that SBM Bank had acted as a conduit for tax evasion by facilitating the transfer of funds to offshore accounts without declaring them to the tax authority.
However, SBM Bank contested the KRA’s claim, arguing that it had acted within the law and had no knowledge of any tax evasion schemes. The bank maintained that it had followed all the necessary procedures for transferring funds and had no reason to suspect any wrongdoing by the companies involved. The case has been in and out of court, with both parties presenting their arguments and evidence. However, in a recent statement, the KRA announced that it was abandoning its claim against SBM Bank. The tax authority cited a lack of evidence to support its claim and a desire to move on from the dispute.
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The decision is a victory for SBM Bank, which has consistently maintained its innocence throughout the legal battle. The bank has argued that it has always acted in the best interests of its customers and has complied with all relevant laws and regulations. The decision by the KRA to abandon its claim against SBM Bank is also a positive development for the banking sector in Kenya. The dispute had created uncertainty and cast a shadow over the bank’s reputation. However, with the case now settled, SBM Bank can focus on its core business operations and continue to serve its customers.
Dispute resolution also reflects a broader trend in Kenya, with a renewed focus on resolving legal disputes and improving the business environment. With the recent launch of the Business Environment Secretariat, the government has signalled its commitment to creating a friendlier and more transparent environment for businesses to operate in.
The decision by the KRA to abandon its claim against SBM Bank is, therefore, a welcome development and signals a positive step towards a more stable and predictable business environment in Kenya. The resolution of this case will reassure other businesses operating in Kenya that the rule of law is upheld and disputes can be resolved fairly and efficiently.
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