Centum school wins Sh3bn tax row with KRA

Centum school wins Sh3bn tax row with KRA

Sabis International School at Runda in Nairobi. PHOTO | SALATON NJAU | NMG A leading international school partly owned by Centum Investments , Investbridge Capital, and SABIS has won a Sh3.1 billion tax dispute with the Kenya Revenue Authority (KRA) over the construction of the school in Kiambu county.

The taxman had dismissed a Sh3.1 billion claim by ACE (Africa Crest Education Holdings) the entity formed by the three firms in 2016 and domiciled in Dubai which they used to put up an international school, for the incentive to put up developments outside Nairobi, Mombasa and Kisumu.

The KRA claimed the school was not entitled to the 150 percent deduction on capital investment they had applied for.

The taxman said the school wanted to enjoy tax incentives set out for manufacturers and should have applied for only a 50 per cent tax deduction.

The tax appeals tribunal however ruled that ACE qualified for the 150 per cent tax subsidy because Treasury had not made it clear that educational buildings were exempt from the incentive.

“Though the intention of Treasury as indicated in the budget speech that introduced that amendment was to restrict the investment deduction to the construction of factories, the same was not reflected in the wording of the section which merely states a building,” the tax appeals tribunal led by Eric Wafula said.

The three firms announced plans to establish several schools across the continent at a cost of between $20 million (Sh2.2 billion) and $35 million (Sh3.9 billion).

The group identified the site for its first school in Kenya where it built the SABIS® International School with the capacity to accommodate up to 2,000 students, but would look to expand beyond East Africa to eventually cover the whole continent.

ACE said it constructed the schoolhouse in Kiambu worth Sh2.06 billion after it had obtained a private ruling from KRA on their qualification for the 150 per cent tax deduction. The school said they had legitimate expectations to get the tax incentive which the KRA had declined.

The case comes even as the government has stepped up a bid to scrap tax subsidies that denies the taxman up to Sh60.3 billion each year. Over the last six years, the government has allowed companies to get away with Sh360 billion in taxes.

The government now wants companies that invest in physical capital or machinery and deduct up to 150 per cent for investment outside Nairobi, Mombasa and Kisumu […]

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