Bamburi Cement #ticker:BAMB has paid Kenya Revenue Authority (KRA) Sh332 million to settle a long-running dispute with the taxman.
The amount is a significant drop from the initial Sh3.9 billion the taxman demanded in 2012.
Bamburi, however, still owes Sh288 million in accrued penalties and says it has applied to have the amount waived.
The settlement was reached in the year ended December, according to the cement manufacturer’s latest annual report.
“During the year the company reached an agreement with the Kenya Revenue Authority on a tax assessment relating to prior years which the company had disputed,” said the company in the report. “A full settlement of the agreed principal tax amounting to Sh161 million relating to corporate tax, value-added tax (VAT) and PAYE and Sh171 million relating to management and technical fees was paid in 2018.”
The company added that it has applied for a waiver on interest and penalties accrued amounting to Sh288 million and which the directors believe will be granted.
The settlement comes after former KRA executive Alice Owuor joined Bamburi’s board in 2017. She had served in various critical areas of tax administration within diverse locations in Kenya since joining the KRA in 1984 as an assessor and retiring as Commissioner, Domestic Taxes in 2016.
Bamburi had previously made a provision of Sh471 million in relation to the KRA tax demand as it appealed the taxman’s claims.
The cement manufacturer was first asked to pay Sh3.9 billion in 2012 comprising principal tax of Sh2 billion and penalties and interest of Sh1.9 billion. The assessment was in relation to the firm’s corporate tax, VAT and withholding tax affairs between 2007-2011.
In 2013, Bamburi received a confirmed assessment of Sh2.67 billion comprising principal tax of Sh1.31 billion and penalties and interest of Sh1.36 billion, which it appealed.
The firm won some of its arguments and the KRA revised the demand downwards to Sh997 million — being a principal tax of Sh456 million and interest and penalties of Sh541 million).
Bamburi contested the new figure but was prepared to pay a total of Sh471 million ahead of the settlement with the taxman.