The Kenya Revenue Authority has frozen the accounts of 11 public universities over Sh9.7 billion in tax arrears.
The KRA decision to attach the bank accounts is likely to cripple the operations of the public learning institutions, some which have been struggling financially.
KRA has been forced to act aggressively on collections because of pressure from the government to pay its rising debts, especially to external creditors. It also needs to pay for major projects and finance other obligations, such as salaries.
The arrears are mainly Pay as You Earn (PAYE) remittances, which have not been made for years.
The law requires that all PAYE deductions made from employees by employers as tax should be remitted to the taxman by the ninth of every month.
Failure to remit PAYE attracts punitive penalties and interest, whichever is greater, of 25 per cent of the amount of the tax involved.
The universities affected are Kenyatta, Technical, Multi-Media, Garissa, Pwani and Jomo Kenyatta.
Also on the list of defaulters are the University of Nairobi, Egerton, Maasai Mara, Moi and Rongo universities.
It is understood that some of these universities have reached out to KRA and agreed on payment plans for the amounts owed.
“The initial amount owed to the Kenya Revenue Authority was Sh10.4 billion. So far, six of the 11 universities have paid Sh730 million to the taxman between July and September 2019,” Commissioner for Domestic Taxes Elizabeth Meyo said.
“The institutions of higher learning who have not reached out to KRA in regard to their tax matters are urged to do so with immediate effect or face the law,” she said.
She warned that the Authority will commence prosecution of the vice-chancellors of the affected universities, who are also the accounting officers, for failing to remit the taxes.
KRA is also targeting businesses that are known to transact with the education institutions to prosecute the directors of companies that have failed to remit Withholding Value Added Tax (Withholding VAT) as required by law.
“Investigations on these companies are ongoing and those found culpable will be charged before a court of law,” Meyo said.
The vice-chancellors, KRA said, will also be investigated in their individual capacities on their tax compliance status.