The Tax Appeals Tribunal has confirmed the Kenya Revenue Authority’s KSh1.7 billion withholding tax assessment on fruit processor Del Monte Kenya, treating additional profits from related-party transactions as deemed dividends.
The assessment follows a transfer-pricing audit covering 2019 to 2021 that adjusted the company’s taxable income and deemed KSh10.6 billion as dividends distributed to foreign shareholders, leading to the KSh1.7 billion tax, penalties and interest.
KRA issued the withholding tax demand on July 30 2025 after the primary adjustment made on December 20 2024, and reaffirmed the demand on October 30 2025, prompting Del Monte to appeal.
The dispute arose from Del Monte Kenya’s sales of fresh and processed pineapples to its Swiss affiliate Del Monte International GmbH and payments for agricultural inputs, production materials, spare parts, software, administration services and interest on an intercompany loan from Del Monte Fund BV.
Del Monte argued that the secondary withholding tax demand was premature because the underlying transfer-pricing adjustment was still being contested, and claimed KRA ignored the functions, assets and risks of the Kenyan entity and its related parties.
The tribunal, chaired by Mutiso Makau, rejected those arguments, noting that the primary transfer-pricing dispute had been decided in KRA’s favour on January 16 2026 and that no stay had been issued against that decision.
The tribunal also cited an earlier ruling that confirmed an income-tax assessment of about KSh4.96 billion, including penalties and interest, and held that the Income Tax Act treats additional taxable income from related parties as a dividend regardless of actual payment.
“The statutory language is clear and mandatory,” the tribunal said, agreeing with KRA that the law does not make the deemed dividend dependent on the final resolution of the primary adjustment.
