Former presidential hopeful Peter Kenneth and other shareholders of Mayfair Bank are facing a tax dispute with the Kenya Revenue Authority (KRA) over the sale of their shares to an Egyptian bank.
The KRA claims that the shareholders underpaid tax by more than Sh1.14 billion when they sold their shares to Commercial International Bank (CIB) of Egypt in 2020 and 2023.
According to an internal document seen by cnyakundi.com, the shareholders paid a total of Sh569.9 million as tax for the sale of their shares instead of Sh1.7 billion, which is the amount that the KRA says they should have paid.
The document shows that Mr Kenneth, who was the founder and chairman of Mayfair Bank, paid Sh113.9 million as tax for his 24.99 percent stake in the bank, which he sold to CIB for Sh2.25 billion in January 2023.
The KRA argues that Mr Kenneth should have paid Sh450 million as tax, which is 20 percent of the capital gain from the sale of his shares.
The capital gain is the difference between the selling price and the buying price of the shares.
The document also shows that other shareholders who sold their shares to CIB in 2020 and 2023 include:
- Mayfair Insurance Company
- Master Holdings Limited
- Amos Gichuki Ngonjo
- Kalpesh Rasik Patel
- Varsani Ramji Devji
- Darshan Chandaria and Neer Chandaria
- Joy Vipinchandra Bhatt
- Priten Bhupendra Patel
- Sonaar Jayandra Shah
- Shital Umankant Khamar
The KRA says that these shareholders also underpaid tax by varying amounts ranging from Sh2.6 million to Sh168.2 million.
The tax dispute comes as CIB completes its acquisition of Mayfair Bank, making it a fully-owned subsidiary of the Egyptian lender.
CIB is the first Egyptian bank to venture into the Kenyan market and aims to position Mayfair CIB as a key bridge between East Africa and Egyptian businesses.
CIB is also ranked as the top bank in Egypt with an asset base of $19.8 billion.
Mayfair Bank was licensed in June 2017 and commenced operations in August 2017.
Currently, the bank has five branches in Nairobi, Eldoret, and Mombasa.
It targets high-net-worth individuals and the corporate market segment.
It is categorized as a small bank with a market share of 0.26 percent as of December 2022.
In April 2020, CIB acquired 51 percent of Mayfair Bank for Sh4.4 billion ($35.35 million).
With the new deal, CIB takes full ownership of the Kenyan lender, having spent a total of Sh9 billion.
After the acquisition of a 52 percent stake in 2020, a solid performance in 2021 saw Mayfair-CIB report its first-ever profit since 2017 when it was first licensed.
