Equity Bank Limited (EBL) entered into an arrangement of transferring its assets to Equity bank Kenya Limited (EBKL) a wholly owned subsidiary by Equity Bank Holdings Limited (EBHL).
The transaction was marred with the following controversies
- That the effective date for the transaction was 31 December 2014, a day before 1 January 2015 when capital gains tax became effective
- That the commissioner issued objection decision after the required 60 days so the taxpayers objection should have passed
- That there was no capital gain realized in the transfer of the shares
The tribunal held that the transaction date was after 31 December 2014 and on the second issue of late objection decision, their verdict was that the delay was not excusable reason to deny the commissioner the right to render his objection decision.
However, on the third issue, the tribunal established that there was no capital gain realized. The tribunal indicated it is not possible that where no third party is involved that the increase in the liabilities of EBKL would at the same time result in a gain in the net worth of EBKL.
Read the full case –
http://www.kenyalaw.org/tribunals/TaxAppealTribunal/2020/Equity-Group-Holdings-Ltd-v-
Commissioner-of-Domestic-Taxes-&-2-Others%5B2020%5DeKLR.pdf