Kenya Revenue Authority(KRA) has streaked another win after court allowed it to collect Sh140 million from Brookehouse School.
This arises from subsidised tuition fees granted to its staff, which the court ruled is a taxable benefit.
Justice David Majanja said the facility granted to the employees by the school is a taxable benefit for which the employee is liable and the school also had an obligation to collect pay-as-you-earn (PAYE).
“I find the commissioner’s position reasonable since staff members would pay the normal and ordinary school fees, which constitute the market rate, but for the employment-related benefit,” the judge said.
The court rejected the argument by Brookhouse that there was ambiguity in law on what value to be attached to non-cash benefits accorded to its employees.
In an appeal to the Tax Appeals Tribunal (TAT), Brookhouse School was seeking orders to bar KRA from collecting Sh140.22 million in PAYE and Sh43.7 million in withholding taxes due for the period between 2010 and 2014.
The institution said that KRA had erred in determining the PAYE due from scholarships and sponsorships to children of its staff.
The school described the discounted fees for children of its teachers as non-cash benefits, adding that the taxman erred by calculating the tax due using the market rate of the fees paid by other students.
The school also faulted KRA for seeking the withholding tax from payments made to Othaya Group Limited and Mauritian firm, Bellur Holdings for construction of a log house.
The KRA did an audit of the school’s account between 2010 and 2014 and communicated its finding in 2017 claiming taxes amounting to Sh186.6 million.
The taxes included PAYE, corporate tax, and withholding tax.
The management of the school objected to the computation, especially on PAYE and non-cash benefits granted to its staff.
