The contractor, SinoHydro Corporation, is reportedly engaged in a fierce war of words with the Kenya Urban Roads Authority (Kura) regarding a Sh1.47 billion tax demand that has been slapped on it by the Kenya Revenue Authority.
The Chinese firm insists that Kura should meet the tax obligation since it was not factored in the initial contract for the road that stretches from the Ruaraka-Thika Road Junction to Taj Mall in Embakasi.
Kura has, on the other hand, taken a firm stand that the contractor ought to have factored in taxation and should therefore pay the tax.
“The amount of VAT for road works is Sh1.47 billion and taxes for supervision consultant are Sh146.6 million,” Kura said in a statement.
But to avert an impeding fallout, Infrastructure Principal Secretary John Mosonik on Thursday assured the contractor that the government was doing everything possible to resolve the tax issues that threaten to further delay the project that was initially set for completion by December 2017.
“You know the law now requires that projects should factor in taxation as a component, however, some of these projects came before the law although for this one we took six to nine months to start, we are in discussion about it [tax],” he said.
The Outering Road expansion project, which was launched by President Uhuru Kenyatta on January 22, began on September 17 as the road designs had to be varied based on site conditions and improvements.
The new designs include elevation of Taj Mall flyover to a three level interchange and the erection of concrete piers for the entrance of the proposed market on Kangundo Road to ease the movement of pedestrians.
The design has, however, reduced the width of the main carriageway to 7.5 metres from 9.0 metres. It has also excluded the proposed Bus Rapid Transport corridor.
The cost of the new civil works is estimated at Sh9.2 billion. This together with the Sh3.38 billion that the project’s consultants are expected to be paid brings the total cost of the project to Sh12.58 billion.