KRA starts paying Del Monte Sh305m refunds after five-year duel

The Kenya Revenue Authority (KRA) is set to pay Del Monte Sh305 million in Value Added Tax (VAT) refunds it has failed to remit to the food processing company since 2010.

The taxman has agreed to pay the sum following out-of-court negotiations that will also see it drop an attachment of assets threat it had slapped Del Monte with in 2013 over a Sh141 million tax demand.

The Sh141 million demand was the subject of another case the fruit processor had filed against KRA, valuing the two suits at Sh446 million.

Under the consent filed in court, KRA will pay the sum in nine equal instalments on the fifth day of every month. Justice Mumbi Ngugi on Wednesday adopted the consent as a court order and marked the court case as settled.

Del Monte sued the taxman in 2013 for failing to pay it the VAT refunds despite supplying KRA with all the necessary documentation needed to authorise payments. The refunds arose from materials Del Monte imports.

“We would be grateful if you would record this matter as settled… KRA do pay the sum of Sh305,597,159 by nine equal instalments. Each instalment will be paid on the fifth of every month. Each party do bear their own costs of the suit,” the consent document reads.

The taxman has started remitting the sums, as the deal was struck before the parties filed their consent in court. KRA has paid Sh67.9 million to Del Monte for October and November.

Del Monte said it had furnished the taxman with its VAT returns, export documents, supply invoices and a certificate from its auditors Deloitte & Touche showing that the amount claimed is more than Sh1 million.

The fruit processor held that its operations had been threatened by KRA’s refusal to pay the sum, as its business is capital-intensive. It added that it was forced to get an overdraft facility, as the Sh305 million had already been designated to cater for other expenses.

Del Monte had initially demanded a VAT refund in 2011 when the amount stood at Sh102 million, but says the taxman only paid Sh42 million then went silent.

The out-of-court deal has also seen KRA deduct its Sh141 million demand from corporate tax overpayments Del Monte made and was to get a refund for.