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Lawmakers told to approve agency tax waiver request

By Mercy Mwai
Thursday, September 24th, 2020
Lands Cabinet Secretary Farida Karoney.
In summary

Mercy Mwai @wangumarci

The National Treasury has urged Parliament to approve a tax waiver request of Sh96.3 million by a State agency dealing with persons living with disability.

In a letter to the National Assembly, Cabinet Secretary Ukur Yatani submitted to the legislators Legal Notice Number 172 seeking to allow the National Fund for Disabled of Kenya (NFDK) be exempted from paying both Value Added Tax (VAT) and Stamp Duty Tax in compliance with section 11 of the statutory Instruments Act to acquire College House. The Sh535  million building is located in Nairobi’s Central Business District (CBD).

Out of the Sh96.3 million waivers that NFDK is seeking, Sh74.9 million is related to VAT and Sh21.4 million is in respect to Stamp duty tax. Kristina Kenyatta Pratt chairs NFDK.

 “The National Fund for the Disabled of Kenya, a charitable organisation established in 1980 and registered as a Trust Fund under the Trustees (Perpetual Succession ) Act and exempt from Income Tax is intending to purchase a property at a price of Sh535 million from a government grant,” the letter.

Yatani, in his letter, explained that his decision follows a recommendation of Lands Cabinet Secretary Farida Karoney approving the transfer of land parcel number 209 /3869 from Heri Holdings to the registered Trustees of the National Fund for Disabled.

The decision by Yatani comes after NFDK, through Pratt, wrote to him seeking exemption from VAT and Stamp Duty on the purchase of the building.

“We are exempt from Income Tax. We  are intending to purchase College House LR number 2018 3869 from Heri Holdings limited at a cost of Sh535 million from a government grant,” the letter. 

NFDK explained that the fund’s strategic aims are to enhance the revenue base to meet its objectives of supporting People  With Disabilities (PWDs).

According to the letter to Parliament, NFDK estimated the total costs of purchasing the building at Sh728 million, which is Sh163 million over and above the Sh565 million set aside for  its acquisition.

Other costs 

Besides the Sh565 million, other costs include Sh120 million for renovation and refurbishment, Sh1.5 million for inspection by the consultants /architects/ engineers, Sh1.5 million valuation fees, Sh10 million legal fees and Sh22.6 million for Stamp Duty.

College House is situated at Nairobi’s CBD and is at the junction of University Way and Koinange Street.

For many years  in the past, the building hosted private offices of the late veteran politician Kenneth Matiba.

The title on which the property lies is being held on leasehold under the name of Heri Holdings Limited for a term of 99 years with effect from June 1, 1954 to June 1, 2051 and has an unexpired term of 31 years.

It measures 0.3170 hectares and is developed with an older style four storey commercial buildings with three wings and has a total built up area of about 40 000 square feet.

Currently, the property collects a monthly income of about She 3.8 million per month and about She 46 million per annum. 

Currently, the Fund has three other properties Including Rehema House, located along Kaunda/Standard street that was bought in 1982 at a price of Sh25 million, New Rehema House located in Westlands and Rehema place along Ngong Road that was bought in 2013 at a cost of Sh475 million.

 Besides Pratt who has been the Trustee and chairperson since 2002, the others who have served in the fund include Hon Pc Nyakiamo, who has been a trustee since January, 1985, former Kitui Senator David Musila  has also served as a trustee since the fund’s inception on October 4, 1980 and one-time Cabinet Minister Marsden Madoka.