The Kenya Revenue Authority (KRA) has waived the payment of Sh115.2 million in interest and penalties by Bamburi Cement through the ongoing tax Amnesty programme.
The manufacturer has disclosed the waiver, which settles a long-standing tax dispute relating to an assessment on transfer pricing.
The firm said it has settled about 60 percent of the Sh288 million in accrued interest and penalties or Sh172.8 million, which has triggered the waiver of the balance.
“We have had collaborative discussions and we have been able to get a resolution on most issues. We have, however, had a difference of opinion sometimes and this has been handled at the tribunal,” Bamburi Cement CEO Mohit Kapoor told the Business Daily.
In 2018, Bamburi reached a settlement agreement with KRA within the Alternative Dispute Resolution framework regarding an assessment for the 2007 -2011 period after which it settled the agreed principal tax totalling Sh332 million relating to corporate tax and a further principal of Sh40.6 million covering 2014-2021.
However, Bamburi saw its request for the waiver of Sh288 million in interest and penalties rejected by the Treasury. The 2023 Finance Act has opened the window for Bamburi to rest the matter with the firm qualifying for the waiver on penalties and interest under the programme by having settled all outstanding principal by the end of last December.
Mr Kapoor says Bamburi has had several engagements with the taxman to clear outstanding tax assessments, including meetings at the board level.
“I have had two or three senior-level engagements with KRA and have met the Commissioner General,” he said.
In Uganda, Bamburi has cleared a similar tax matter to bring to an end a protracted tax dispute, also relating to transfer pricing.
In the half-year period to June 2023, Bamburi Cement tax liabilities went up by more than 10-fold to Sh533 million from Sh29 million previously with the uptick reflecting the uptick in the settlement of corporation tax matters in Uganda.
The higher tax liabilities cut the company’s net profit for the period to Sh88 million from Sh95 million a year earlier.
In its annual report, Bamburi Cement stated it undergoes periodic tax audits to test its compliance with respective tax laws.
“The Group is regularly subjected to evaluations, by the taxation authorities, of its direct and indirect taxation affairs and in connection with such reviews, tax assessments can be issued by the taxation authorities in respect of the Group’s taxation affairs in relation to where a group entity is deemed to have failed to comply with tax laws,” the company notes.
