This archive report was first published on 3 May 2021.
On May 3, 2021, Justice David Majanja ruled in favor of the Kenya Revenue Authority (KRA) in a Ksh140 million tax dispute with Brookhouse School.
Brookhouse, one of Kenya's most expensive learning institutions, had been disputing the tax claim since a KRA audit between 2010 and 2014 resulted in a Ksh186.6 million tax claim communicated in 2017.
The school had argued that subsidized tuition fees granted to its staff did not constitute a taxable benefit, but Justice Majanja disagreed, ruling that the employer had an obligation to collect pay-as-you-earn (PAYE) taxes.
Brookhouse had claimed that the value of non-cash benefits, such as subsidized school fees, was ambiguous and could not be taxed, but the court rejected this argument, agreeing with KRA's position that the benefits were taxable.
According to the court ruling, Brookhouse's staff members would pay the normal and ordinary school fees, which constitute the market rate, but for the employment-related benefit.
Brookhouse had also argued that even if the benefits were deemed taxable, they should be charged 10 per cent of the benefits tax as opposed to the full 85%, but the court rejected this argument as well.
As a result of the court ruling, Brookhouse School will have to pay Ksh140 million in taxes to the Kenya Revenue Authority.
