The Sh1 billion tax case facing Bluebird Airlines has been settled after the Kenya Revenue Authority agreed to cancel the notices it issued in January last year.
Commissioner of domestic taxes, Kenya Revenue Authority and Bluebird Airlines resolved their dispute and recorded a consent dated 13 January this year.
"The respondent has recomputed the income tax for Bluebird for the financial years 2017 to 2022 which lead to the reduction of cumulated losses to Sh350 million in 2021. Consequently, KRA and Bluebird have amicably resolved their dispute," read part of the agreement.
By consent "...agency notice dated 25 January 2022 by KRA Commissioner for domestic taxes department directed to Bluebirds bankers directing it to pay the authority Sh1 billion being tax dues have been quashed".
Bluebird aviation sued KRA in January last year.
It sought to stop the collection of the claimed Sh 1 billion in taxes. The airline claimed that no assessment of its books had been done to warrant the demand.
It also said it had in its possession tax compliance certificates for all its years of operations and does not have any tax due.
"To the contrary, we currently have a tax credit of Sh540 million," it said in its suit papers filed last year.
But with the consent recorded and adopted in court, its operations which were paralysed as a result of the agency notices can now resume to normalcy.
Bluebird in the suit said the notices paralyzed its operations by having numerous cheques dishonoured, loss of business due to none payment of fuel suppliers and penalties due to late payment of general suppliers.
The airline was also unable to pay PAYE, NSSF, NHIF, NITA and other statutory penalties. It argued that as a result of the notices, it lost competent and long-serving specialized personnel.
It argued that the authority's action to issue them with the notices was illegal as it violated their right to exhaust the provided dispute resolution remedies.
