- MPs are probing circumstances under which Blue Nile Rolling Mills Limited was exempted from taxation.
- Kiambaa MP John Njuguna had sought statement on the exemption.
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The government has defended issuing tax waivers to the select companies as Parliament moves to audit whether the process followed the law.
In a document tabled in parliament, Treasury Principal Secretary Chris Kiptoo said the law allows for the waivers, especially in areas where the nation stands to benefit from the investments.
The PS was responding to an inquiry by the National Assembly’s Committee on Delegated Legislation which is probing the circumstances under which Thika-based Blue Nile Rolling Mills Limited was given tax exemption.
The inquiry stemmed from a question by Kiambaa MP John Njuguna who had sought a statement on the tax exemptions.
Njuguna told the House that the 2020 Special Operating Framework Arrangement (SOFA) that the Compnay signed with the government exempts the firm from paying income corporate tax for up to 10 percent.
The agreement also enabled the company not to pay Value Added tax (VAT), Import duty, Import Declaration fee (IDF) and Railway Development Levy (RDL) on raw materials for five years.
The lawmaker argued that the government has been denied revenue as a result of the exemptions.
“It is against this background that I request the Committee to inquire into the operations of the Blue Nile Steel Rolling Mills Limited and present a report to the House, making relevant recommendations thereof,” Njuguna said.
But in his response submitted to the Delegated Legislation Committee, the PS denied any wrong saying the deal was structured with the existing regulations and laws including regional treaties.
The Committee is chaired by Ainabkoi MP Samuel Chepkonga.
“In the year 2018, the Government amended tax laws through the Finance Act, 2018 – Value Added Tax and Miscellaneous Fees and levies Act to provide tax incentives for Special Operating Framework Agreement with the Government,” Kiptoo said.
The PS also indicated that the Attorney General in 2023 okayed the deal after the ministry sought its legal opinion.
“The Attorney General advised that Blue Nile Rolling Mills Limited be exempted from the new taxes and levies that undermine implementation of the SOFA,” the PS said.
The PS however did not divulge the total value of tax exemptions, the government that has been granted to the Company so far and the amount at the end of the agreement.
According to Kiptoo, the ministry had not consulted the Kenya Revenue Authority (KRA) to ascertain the value of the tax exemptions.
“Actual total values of taxes, fees and levies including import duty that has been exempted so far will be provided later after consultation with Kenya Revenue Authority (KRA),” Kiptoo explained.