KRA throws a ball at the Treasury on the tax exemption of hospitals
The Kenya Revenue Authority has said it will exempt Hampton Hospital from paying multi-billion dollar taxes on its equipment and machinery if cleared by the Treasury.
In its response to the hospital case filed in the High Court, KRA argues that when the hospital received a recommendation from the Cabinet Secretary of Health, Mutahi Kagwe, it should have gone ahead and obtained an exemption certificate from Treasury CS Ukur Yattani.
KRA says the case against her should instead be against the two CSs.
“The only time a taxpayer is exempt from paying VAT is when there is a letter or certificate of exemption from the Secretary of Cabinet, National Treasury and Planning,” KRA replied.
The High Court has banned KRA from auctioning the hospital’s anti-cancer machines and solar equipment in a tax dispute. The machines were dispatched by the associate of former Kenya Air Force officer Julius Mwale. Judge Jairus Ngaah ordered the KRA not to carry out its plan until the case filed by the hospital challenging the tax decision is determined.
“In order to preserve the bedrock of the prosecution, I am convinced that the authorization granted should function as a stay. The fourth prayer of the convocation is therefore granted, ”said Judge Ngaah.
Hampton Hospital, through attorney Javier Munzala, told the court that its client imported the machines purposely for cancer treatment. Munzala said the hospital had asked Cabinet Secretary of Health Mutahi Kagwe to exempt it from paying taxes for the machines, a request the minister reportedly accepted.
“The claimant (Hampton) is a recognized medical provider and as such exempt from paying VAT on goods imported as part of the provision of healthcare in Kenya,” he said.
He said Hampton produced a letter from Mutahi stating an exception to the tax after learning his items were among those up for auction.
Munzala added: “The imported goods are unique, irreplaceable and worth a colossal amount of money. The plaintiff risks irreparable loss and damage which cannot be compensated by damages if the auction is allowed to proceed as planned.
He argued that Kenyans will also suffer as they will not have access to the highest healthcare standards if the auction is allowed. KRA had planned to hold the auction on Tuesday this week.
Hampton Hospital is based in Butere, Kakamega County, and imported cancer machines in May this year.