KRA demands Sh451m tax from troubled ARM

ARM has not remitted PAYE taxes amounting to Sh96.9 million for the months of January through July this year. FILE PHOTO | NMG 

Kenya Revenue Authority (KRA) is demanding Sh451 million from ARM Cement #ticker:ARM in the form of various taxes that the cement manufacturer, currently under administration, has not paid for more than a year.

Withholding, payroll and value added taxes (VAT) are among the levies that have gone unpaid after the Nairobi Securities Exchange-listed firm’s losses and cash flow crisis worsened.

“The administrators have received a claim in the sum of Sh451 million from the Kenya Revenue Authority on September 4, 2018,” ARM’s administrators PricewaterhouseCoopers (PwC) said in a report.

The taxman and other parties including banks, employees and suppliers are waiting for the administrators to decide which options will best help the creditors recover their money.

Among the taxes claimed by KRA is VAT of Sh100.7 million that has been outstanding for the months of October 2017 to February, April, May and July 2018.


ARM has not remitted PAYE taxes amounting to Sh96.9 million for the months of January through July this year. It is also yet to pay its employees some Sh126.9 million in salaries. The company has also accumulated withholding tax of Sh38 million since September 2016.

PwC says it is looking at various options of resolving ARM’s huge debt including getting strategic investors, selling assets and the whole company.

The administrators said they will in the short term seek a bridge loan from ARM’s existing secured lenders and other parties to maintain cement production.

PwC says keeping production rolling is important in maximising value for creditors in whichever combination of options is used to resolve its debt pile including selling assets and getting a new strategic investor.

“The administrators consider that pursuing such a transaction while operations are ongoing would be likely to achieve a better outcome than shutting the plants and undertaking an asset sale,” reads part of the report.

“As a consequence, the Administrators have taken the view that continued trading is, in the interim, in the best interest of the company and its creditors.”

If ARM’s woes will not have been resolved by September 2019 –a year after going into administration— PwC will need court approval to extend its mandate.