The Auditor-General, Edward Ouko in an audit report of the re-insurer says the outstanding tax is material to its 2017 full-year accounts.
Chief executive officer Jadiah Mwarania had not responded to Business Daily queries over the queries by the time of going to press.
Kenya Re has recently been in the eye of a storm after it sent home Mr Mwarania and replaced him with Mr Michael Mbeshi in acting capacity.
Kenya Reinsurance Corporation (Kenya Re) says it is optimistic of a reprieve from the taxman who is demanding Sh1.2 billion even as the Auditor-General questions why it has consistently failed to make provisions for the demand.
“The Kenya Revenue Authority (KRA) made a final assessment relating to withholding tax on cedant acquisition costs and brokerage fees,” says Kenya Re.
“The amount is the subject of ongoing court case between Kenya Re and KRA. Management are of the opinion that this will not be payable and as a result, no provision has been made in these financial statements.”
The Auditor-General, Edward Ouko in an audit report of the re-insurer says the outstanding tax is material to its 2017 full-year accounts.
“The outcome of the tax remains uncertain even though the company continues to hold discussions with KRA in attempt to resolve the matter in contention,” says Mr Ouko.
Kenya Re posted an 8.8 per cent rise in after-tax profit in the year ended December, which it attributed to an increase in its gross written premiums and investment income.
Its net profit stood at Sh3.5 billion in the period compared to Sh3.2 billion the year before.
Mr Ouko also raises doubts on the re-insurer’s revenue recognition format.
“The group has estimated unearned premium reserves at 40 per cent of the written premiums to defer premium income written but not earned during the reporting period,” he points out.
“We considered this to be a key audit matter since the group’s financial results are significantly sensitive to changes in this judgement by directors. We also considered there to be a risk that revenue is inappropriately reported to achieve desired financial results.”
Chief executive officer Jadiah Mwarania had not responded to Business Daily queries over the queries by the time of going to press.
Kenya Re has recently been in the eye of a storm after it sent home Mr Mwarania and replaced him with Mr Michael Mbeshi in acting capacity.
Mr Mwarania who went to court to protest the sacking was recently re-instated by the court with Kenya-Re appealing the decision.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
