Kenyan Court Upholds Bid to Tax PE Fund, May Weigh on Deals

Kenya’s High Court ruled that a private equity firm must pay tax on profits from the sale of a local business, even though the transaction was completed overseas, a landmark decision that may jeopardise the country’s ability to attract foreign capital.

The court found that Emerging Capital Partners owes Kenya’s revenue authority 2.5 billion shillings ($19.3 million) in taxes from the 2017 sale of its stake in Java House, a popular quick-service restaurant chain. Although ECP owned Java House through a Mauritius-based holding company, the tax agency argued that the business was managed from Kenya and that its value was ...