Nairobi Hospital fights Sh403m tax claim

The Kenya Revenue Authority (KRA) is pursuing a Sh403 million claim from Nairobi Hospital, deepening its fights with corporate bodies over tax payments.

Nairobi Hospital says in the latest annual report that KRA in May last year issued an assessment notice to Kenya Hospital Association—the trading company of the 69-year-old health facility.

The hospital says the initial assessment was higher than Sh403 million and only dropped to the current level after the matter was referred to the Tax Appeals Tribunal. Nairobi Hospital is, however, still objecting to this revised tax claim.

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“The management disagrees with this opinion and has filed an objection with the Tax Appeal Tribunal within KRA,” says the hospital.

Other firms that have run into tax assessments disputes with KRA recently include Keroche Breweries, Family Fashion Clothing Limited, Equity Bank Kenya, Eastleigh Mall Ltd, Naivas Limited, Pesapal, Kaluworks Limited and De La Rue Kenya.

Nairobi Hospital says KRA issued the assessment notice under section 31 (1) of the Tax Procedures Act 2015 which empowers the commissioner to amend an assessment by “making alterations or additions, from the available information and to the best of the Commissioner’s judgement.”

The KRA normally issues such notices in the case of a deficit carried forward or in case of an excess amount of input value-added tax or in any other case. An amended assessment is usually aimed at ensuring taxpayers pay the correct amount of tax.

The Sh403 million KRA claim is equivalent to 24 percent of the Sh1.68 billion that was in the hospital’s operating fund at the end of last year.

Nairobi Hospital has disclosed the KRA claim in its contingent liabilities that also includes Sh330.86 million pending lawsuits.

The latest value of lawsuits, relating to various civil suits filed against the company by various parties in the normal course of business, translates into an 86 percent jump from Sh177.58 million a year earlier.

“The (lawsuit) claims have not been provided for in the financial statements. The hospital, based on advice received from the company’s legal advisers, is of the opinion that no significant claims will crystalise from the pending suits,” says the hospital.

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Nairobi Hospital returned a deficit of Sh564.7 million in the financial year under review, down from a surplus of Sh320.3 million a year earlier.

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