Sonko’s KSh1.4 Billion Bank Trail Ends in KSh385 Million KRA Tax Battle

Former Nairobi Governor Mike Sonko has suffered a major setback in his long-running battle with KRA.

The Tax Appeals Tribunal dismissed his challenge against a KSh385 million tax assessment.

The judgement exposes how missing financial records can derail even sweeping legal arguments.

It also places evidence at the centre of Sonko’s next courtroom battle.

Bank Trail

KRA’s investigation covered Sonko’s financial affairs between 2013 and 2019.

During that period, Sonko served as Nairobi senator and later as a county governor.

The taxman examined eleven bank accounts operated by the former governor.

Those accounts were held across Equity Bank, KCB, DTB, and Co-operative Bank.

KRA identified deposits totalling about KSh1.4 billion during those seven years.

It then compared those deposits against income Sonko had declared.

The comparison revealed what KRA considered a substantial income discrepancy.

KRA initially assessed additional income tax at KSh407.4 million.

That assessment was issued on June 24, 2022, after investigations concluded.

Sonko was later allowed to lodge a late objection against it.

On December 13, 2024, KRA issued its objection decision.

The decision partially confirmed an additional tax of KSh385.14 million.

KRA did not simply treat every bank deposit as taxable income.

Its analysis excluded loans, reversals, contra-entries, and bounced cheques.

It also removed income already taxed elsewhere, including employment income.

After those adjustments, KRA calculated substantial taxable income remained.

Its detailed computation placed taxable income at KSh1.287 billion.

The resulting income tax computation amounted to KSh386.14 million.

The largest year was 2017, according to the taxman’s calculations.

That year produced nearly KSh499 million in net taxable income.

KRA consequently calculated approximately KSh149.7 million in income tax.

Those figures became the foundation of Sonko’s appeal before the Tribunal.

Sonko’s Defence

Sonko did not dispute that money had moved through his accounts.

Instead, he challenged KRA’s interpretation of those financial movements.

He argued that the taxman had failed to recognise legitimate business expenses.

He also said supporting documents and supplier declarations were disregarded.

Some disputed deposits, he maintained, represented legitimate business transactions and non-taxable funds.

Sonko also argued that KRA could verify transactions through its iTax system.

The authority, he noted, could check suppliers’ declarations and reported sales.

That would have helped determine whether his claimed purchases were genuine.

He further argued that KRA had failed to properly calculate business costs.

But the Tribunal found a fundamental problem with that defence.

Sonko had not adequately demonstrated that those supporting documents existed.

Nor had he shown that KRA actually ignored documents he supplied.

The Tribunal instead found that his iTax argument exposed the evidentiary weakness.

It interpreted his submission as acknowledging that requested records were unavailable.

That finding became crucial to the Tribunal’s eventual decision.

The law, it said, places an evidentiary burden upon taxpayers challenging assessments.

Section 56 of the Tax Procedures Act places that burden squarely.

Section 30 of the Tribunal Act reinforces the same legal principle.

A taxpayer must prove an assessment is excessive or otherwise incorrect.

Sonko, the Tribunal concluded, had not crossed that evidentiary threshold.

Evidence Failed

The Tribunal’s sharpest criticism concerned Sonko’s failure to produce documents.

It noted that assertions alone could not overturn KRA’s assessment.

“He who asserts must prove,” the Tribunal stated in its reasoning.

It also invoked another established principle: “A mere statement in pleadings is not evidence.”

The Tribunal said Sonko had engaged in assertions without sufficient supporting evidence.

That left KRA’s banking analysis largely unrebutted before the panel.

The problem became even more serious during the final stages.

On June 19, 2026, the Tribunal granted Sonko another opportunity to produce documents.

He was directed to file supplementary evidence by July 8.

He was also required to submit supplementary arguments by July 17.

But Sonko failed to comply with both deadlines.

The Tribunal consequently restored the earlier position and proceeded without them.

That failure mattered because documentary evidence was central to Sonko’s defence.

Without those records, the Tribunal had little basis for rejecting KRA’s reconstruction.

The panel therefore found KRA justified in rejecting Sonko’s objection.

It dismissed the appeal and held that Sonko had failed his statutory burden.

Next Battle

The ruling does not necessarily end the dispute.

Sonko has indicated that he intends to take the matter to the High Court.

He maintains that he possesses evidence capable of explaining the disputed deposits.

That next battle could therefore turn heavily on documentary evidence.

It could also test how far KRA can rely upon banking analysis.

There is another intriguing issue buried within the Tribunal’s final orders.

The Tribunal dismissed Sonko’s appeal after finding KRA’s objection decision justified.

Yet its formal orders also say that decision was set aside.

That apparent contradiction could become significant in any further proceedings.

For now, however, the Tribunal has delivered a blunt message.

READ ALSO: Maize Supplier Hit With KSh593 Million Tax Bill After Losing Fight With KRA

A taxpayer cannot defeat a tax assessment through allegations alone.

Banking records may raise questions, but documents must provide the answers.

For Sonko, the KSh385 million battle has therefore become an evidentiary fight.

And in the first round, the missing records proved more damaging than his arguments.

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