Safaricom #ticker:SCOM has resolved a tax dispute with the Kenya Revenue Authority (KRA), freeing up Sh2.2 billion that the telco had set aside to settle the potential liability.
The amount was booked as miscellaneous income in the year ended March, helping the company to grow its net income 27.1 per cent to Sh48.4 billion in the period.
“During the year, the group released accruals relating to principal and interest on tax matters with the Kenya Revenue Authority totalling to Sh2.2 billion … upon resolution of the matter,” the company discloses in its latest annual report.
The cash formed the bulk of Sh2.5 billion “other income” in the review period, a major surge in the item that last peaked at Sh576 million in the year ended March 2015.
“This category includes income from disposal of assets and other miscellaneous incomes which includes any one-off transactions not likely to recur in future,” the company said in the report.
Safaricom noted that it has other pending issues with the taxman, adding, however, that it does not expect to make a significant tax payment from them.
“The company has outstanding matters with the Kenya Revenue Authority and various ongoing legal cases from trade and contractual disputes arising from normal course of business,” the company said.
The tax issues are seen emanating from the company’s complex business. Safaricom’s external auditor PricewaterhouseCoopers (PwC) says, for instance, the major complexities in the telco are impairment of infrastructure assets and revenue recognition across multiple services which are sometimes bundled up.
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Note: The results are not exact but very close to the actual.
