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Nairobi Hospital rejects KRA’s tax demand on free cancer drugs

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The Nairobi Hospital entrance. FILE PHOTO | NMG 

The Nairobi Hospital has accused the Kenya Revenue Authority (KRA) of seeking to collect taxes on donated cancer drugs that the facility administers on patients for free.

The hospital has now moved to court seeking to suspend the taxman’s agency notice to its banks directing them to remit Sh61.7 million from its accounts, being the outstanding tax.

The hospital claims that the cancer drugs were donated to the Kenya government through the Ministry of Health and that it was selected to administer them on patients for free and therefore not liable for any tax.

“That from above, it is evident that the drugs were imported for the Ministry of Health in accordance with the memorandum of understanding between the government of Kenya, ministry of health and Novartis Pharma AG to be administered free of charge by Nairobi Hospital,” says the hospital.

At the centre of the dispute is a cancer drug donated to the government of Kenya, and government undertook to exempt the drugs from taxation.

The Ministry of Health picked Nairobi Hospital to administer the drugs free of charge.

But when the drugs landed in Kenya, the hospital says there were no legal provision to exempt it from Railway Development Levy and that the Ministry of Health paid Sh24.1 million out of the outstanding tax of Sh38 million to secure the release of the consignment.

The hospital says that the Principal Secretary, Ministry of Health, wrote to KRA on July 9, 2017 undertaking to pay the remaining tax balance.

The facility claims that it is being wrongly pursued by KRA for tax that the ministry has admitted liability on.

KRA on December 17 asked Commercial Bank of Africa, Barclays Bank of Kenya and Standard Chartered Bank to remit the Sh61.7 million from Nairobi Hospital accounts to settle the outstanding tax. The hospital has produced in court a letter written in November, 2016 to PS Treasury Kamau Thugge by the then PS Health Nicholas Muraguri requesting for additional funding of Sh31.2 million to settle the tax.

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