The taxman has slapped the Kenya Electricity Generating Company (KenGen) #ticker:KEGN with Sh650 million interest arising from a contested multibillion tax demand.
The power producer on Wednesday said it was optimistic of a reprieve from the Kenya Revenue Authority (KRA) who is demanding Sh2.43 billion tax, the interest as well as unspecified penalty.
“The interest is about Sh650 million,” clarified KenGen’s Finance and ICT director John Mudany. The Nairobi Securities Exchange-listed firm attracted the compensation tax after paying dividend arrears to the Treasury last year.
The listed firm paid dividend of Sh6.164 billion according to an audit report by the Auditor General for the year ended June 2017. It has been negotiating for a waiver of principal, penalty and interest in talks that started a year ago.
Mr Mudany had earlier said if the company secures the waiver from the KRA it would allocate the funds to ongoing capital intensive projects.
“We are still in discussions. We are hopeful they will look at it with favour,” Mr Mudany said.
“If we are forgiven, we will invest the money into putting up more power plants and achieving the government’s own vision of cheap energy. The money can do a lot.”
The taxman prohibits firms that get tax deduction on investment from distributing the profit. However, KenGen payment was on arrears accumulating from earlier years in which it had already paid smaller shareholders.