Cale Infrastructure Construction Company Ltd has lost a KSh 6.92 billion tax battle after the High Court upheld a Kenya Revenue Authority (KRA) assessment tied to the Nairobi Expressway project.
- •The contractor, a subcontractor to Moja Expressway Company Ltd, argued that it remained entitled to tax exemptions on imported machinery, vehicles, tools, and materials because the expressway project was not fully complete.
- •Cale Infrastructure claimed that the absence of a performance certificate under its contract meant construction was ongoing into 2023 and challenged KRA’s demand for KSh 863 million on hardware and spares, saying bond cancellations did not conclusively end its exemption.
- •For KSh 5.7 billion in taxes on materials consumed in the project, the company argued that the National Treasury had expressly undertaken to settle the liability, relieving it of responsibility.
Justice Freda Mugambi sided with KRA, holding that the completion certificate and bond cancellations marked the end of the exemption period. The court ruled that the absence of a performance certificate did not extend tax benefits, and that exemptions tied to bonds expired when they were canceled.
KRA argued that the expressway reached substantial completion in May 2022, as evidenced by a completion certificate from the Kenya National Highways Authority (KeNHA) and the subsequent public opening. The tax authority said customs bonds were canceled at the company’s own request, signaling the end of the construction phase and the lapse of exemptions.
“There is no dispute that the Completion Certificate was issued on 13th May 2022, and that the expressway was operational as of 14th May 2022. The Moja Expressway CEO publicly confirmed that over 10 million vehicles had used the road in the six months following its opening,” Justice Mugambi ruled.
On the Treasury’s undertaking, KRA maintained that statutory tax liability rests with the company and that it was not bound to pursue payment from another government entity. The appeal was dismissed in full, leaving Cale to bear the multi‑billion‑shilling assessment.
“While it is not disputed that the National Treasury issued an undertaking to pay the tax on certain project materials, the legal duty to pay taxes under the applicable tax statutes remains with the importer, in this case, the appellant,” the court decided.
Cale Infrastructure, based in Nairobi, handled pre‑construction works, mobilization, and machinery supply for the 27-kilometer expressway. The KSh 88 billion public‑private partnership was led by China Road & Bridge Corporation.