This archive report was first published on 9 September 2021.
Published on September 9, 2021, Centum Investments, a company linked to the late billionaire Chris Kirubi, has revised its tax obligation on properties from Sh. 669.9 million to Sh. 4 billion.
The revision comes after the company started using the corporate income tax rate of 30 percent, following a decision by the Tax Appeals Tribunal that entities involved in the sale and development of land should be taxed at the higher rate.
Previously, Centum had been assessing tax payable on revaluation gains in its real estate portfolio based on the capital gain tax (CGT) rate of five percent.
According to Centum's chief finance officer Wambua Kimeu, the company has established that deferred tax should be determined at the statutory income tax rate of 30 percent, as the entity is deemed to be trading in land/properties rather than holding them for capital appreciation.
“For investment properties, where realization is expected to be through sale or development and sale of the property, management has established that deferred tax should be determined at the statutory income tax rate of 30 percent as the entity is deemed to be trading in land/properties rather than holding them for capital appreciation,” Kimeu said in a report.
Between 2019 and 2020, Centum had booked cumulative revaluation gains of Sh. 13.3 billion in its investment properties, with a deferred tax assessed at Sh. 669.9 million at a rate of five percent. In the new revision, the Sh. 13.3 billion gains have a deferred tax of Sh. 4 billion at a rate of 30 percent corporate income tax.
