Bluebird Aviation (Kenya) (BBZ, Nairobi Wilson) no longer faces a KES1 billion shilling (USD8 million) tax bill after the Kenya Revenue Authority agreed to drop its demand against the regional passenger charter airline.
In a consent note adopted by the Kenya High Court on January 18, 2023, the KRA and the airline agreed to quash agency notices issued on January 25, last year, to the airline’s bankers directing them to pay the amount, reports Business Daily. The KRA issues agency notices to banks holding deposits on behalf of a taxpayer, which may result in the bank freezing such funds to recover its dues.
According to the consent note, KRA had recomputed the income tax for the airline for the financial years 2017 to 2022, which led to a reduction of accumulated losses to KES348.6 million (USD2.8 million) in 2021.
“Consequently, the respondent and the ex-parte applicant have amicably resolved their dispute and, consequently, record the same by way of a consent order,” said the agreement dated January 13, 2023.
Bluebird Aviation took the KRA to court in January 2022, arguing that no assessment of its books had been done to warrant the demand. It had also presented tax compliance certificates for all its years of operations and claimed a tax credit of KES540 million (USD4.3 million).
The Star newspaper reported that Bluebird Aviation said the agency notices to its banks had paralysed its operations, had caused it loss of business as it was unable to pay fuel suppliers, and it had incurred penalties due to late payment of general suppliers.
The airline was also unable to pay employee taxes and had lost competent and long-serving staff due to the KRA’s action.
Bluebird Aviation was not immediately available for comment.
The airline operates from Nairobi's Nairobi Wilson Airport with a varied fleet that includes four DHC-8-100s, one DHC-8-Q400, three DHC-8-Q400(PF)s, and two F50s among others.
