- The government in 2022 exempted the company from paying all duties, levies and value added tax in an arrangement known as special operating framework agreement
- The company enjoys importing raw materials cheaper than other steel manufacturers
Image: FILE
A petitioner has moved to court to stop the exemption of steel manufacturer Blue Nile Rolling Mills Limited from paying taxes.
Lawyer Apollo Mboya says the exemption was arbitrary, unprocedural and unconstitutional because it discriminated other players in the industry.
The National Assembly, Cabinet secretaries for Treasury and Trade and their Principal Secretaries have been listed as the first to fifth respondents respectively.
Mboya has also sued the Kenya Revenue Authority and the Attorney General with Blue Nile Rolling Mills Limited listed as an interested party in the public interest petition.
The government in 2022 exempted the company from paying all duties, levies and value added tax in an arrangement known as special operating framework agreement.
The petitioner says the CSs granted the exemption yet they did not have any power to do so.
The move, Mboya claims, has cost the country billions in unpaid taxes.
"One of these creatures is the agreement between the CS Treasury, CS Trade and Industry and Blue Nile Rolling Mills Limited dated January 30, 2020, that has orchestrated the colossal loss of revenue to the government in the sum of Sh188,957,415,195 and counting, at a time the country is fraught with unrest and economic hardship resulting from pilferage and mismanagement of government funds and resources."
Through the special operating framework agreement, the government has unjustifiably granted blanket tax exemptions and reduced tax rates to entities without public participation.
He wants the matter certified as urgent.
In his prayers to the High Court, Mboya wants a conservatory order issued to suspend the implementation of the agreement.
The exemption has also created an unfair competitive advantage to Blue Nile and is likely to push other players out of the market.
With the tax exemption, the galvanised wire manufacturer enjoys importing raw materials at a price that is 47 per cent cheaper for billets and 62 per cent cheaper for wire rods compared to other steel manufacturers.
"The imminent closure of the said businesses will consequently lead to further loss of revenue to the government as well as loss of jobs to both skilled and unskilled labour of about 22,100 and 75,000 respectively."