Brookhouse International School Kenya has been directed to pay Ksh140 million to the Kenya Revenue Authority (KRA).
Brookhouse is said to have been charging a lower amount of school fees for some parents while others pay much more.
The international school is said to have subsidised tuition fees for its staff members between 2010 and 2014.
KRA in a 2014 review discovered that the school owed the taxman much more to a tune of Ksh186 million, Business Daily reports.
The taxman said that these amounts accrued from Pay As You Earn (PAYE), corporate tax and withholding tax.
Brookhouse opposed KRA arguing that the law was so complex on how to value non-cash benefits companies according to their staff members.
The school disputed KRA’s computation of the benefits especially PAYE arguing that there was no clear legislation on school fees taxation whole explaining that teachers were charged 15 per cent of the applicable school fees.
In the appeal, Brookhouse said faulted KRA’s computation saying that it was supposed to be capped at 10 per cent of the total teachers’ pay.
However, High Court Judge David Majanja said that the subsidised facility was taxable and that the management should collect PAYE.
“I find the commissioner’s position reasonable since staff members would pay the normal and ordinary school fees, which constitute the market rate, but for the employment-related benefit,” Justice Majanja ruled.