The October 9 ruling marked the third consecutive victory for Raval's companies in a long-running dispute over billions of shillings in unpaid taxes.
KRA had previously pursued tax claims against several Devki Group subsidiaries. However, it abandoned demands amounting to about KSh 4 billion against Cemtech and Devki Mills before the latest tribunal decision.
The dispute dates back to tax relief agreements made between Devki Group companies and the Jubilee administration. Under the arrangements, the government had committed to cover VAT on machinery and other imports used in the company's industrial projects.
The deal included a 16 per cent VAT exemption on machinery and clinker imported for a cement plant in West Pokot in 2015, alongside machinery brought into the country by Devki in 2020.
The agreement later faced challenges when Treasury Cabinet Secretary John Mbadi informed the affected companies in a letter dated October 2, 2024, that the government could not legally use public funds to settle their tax obligations.
Mbadi maintained that the arrangement had no legal backing under existing tax laws. KRA subsequently issued tax demands against the companies.
However, the Tax Appeals Tribunal ruled that Maisha Mabati's circumstances were different from those of other companies involved in similar disputes.
The tribunal found that KRA had been a direct party to the agreement involving the Treasury and Maisha Mabati. The authority had also issued written approvals and exemption codes, which it repeatedly renewed.
These approvals allowed the company to import machinery for its KSh 1 billion manufacturing plant in Lukenya.
The tribunal observed that KRA could not approve the arrangement, facilitate its implementation and later demand taxes that the company had been allowed to avoid paying.
Maisha Mabati also presented records showing that KRA had previously written off Cemtech's outstanding VAT arrears under Section 37F of the Tax Procedures Act.
The provision gives the tax commissioner powers to refrain from assessing or recovering unpaid taxes under certain circumstances.
The company argued that it should receive similar treatment, citing the tax authority's previous actions involving another Devki subsidiary.
The dispute has raised questions about the legal status of tax agreements between the government and private investors, particularly where KRA is directly involved in approving the arrangements.
In a separate development, KRA has given multinational companies operating in Kenya until November 30, 2026, to declare their tax status under the Minimum Top-Up Tax framework.
The requirement falls under Section 12G of the Income Tax Act and applies to companies covered by the global minimum tax rules.
Affected businesses must submit their group details, identify their ultimate parent companies and provide the names and PINs of their Kenyan entities through mttsupport@kra.go.ke.
They are also required to file the relevant returns, declare any additional tax payable and settle their liabilit
ies within the prescribed timelines.
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