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The Kenya Revenue Authority (KRA) has intensified its pursuit of Ksh1.79 billion ($12.5 million) in taxes from the Mukuha family, heirs of the late retail magnate Peter Mukuha Kago, renowned as the visionary behind Kenya’s largest retail chain, Naivas International.
The KRA’s demand is linked to a 31.5-percent stake sale in Naivas International in 2020 by members of the Mukuha family.
The KRA alleges that the family structured the transaction through Mauritius to evade taxes within Kenya, a claim that prompted the tax authority to take the matter to the tax tribunal.
According to official statements, the KRA contends that the family’s investment entity, Gakiwawa Family Investments, received Ksh5.2 billion ($36.2 million) from the deal that was orchestrated in Mauritius to circumvent tax liabilities in Kenya.
Despite their appeal being dismissed by the Tax Appeals Tribunal, the KRA is resolute in pursuing the Ksh1.79 billion ($12.5 billion) in corporation tax, including associated penalties and accrued interest.
Meanwhile, the Mukuha family is poised to sell an additional 11-percent stake in Naivas International, the preeminent supermarket chain in Kenya, for an estimated $41.7 million.
This impending transaction would mark the family’s third partial divestment from Naivas, and would result in their ownership interest shrinking from the current 60 to 49 percent, effectively rendering them minority stakeholders.
The valuation of Naivas International stands at $379 million, in alignment with the $41.7-million offer for the 11-percent stake.
The divestment comes against a backdrop of heightened profitability and expanding market share and follows the family’s initial sale of a 31.5-percent stake in 2020.
During that transaction, a consortium led by the International Finance Corporation (IFC), German fund DEG, and private equity firms Amethis and MCB Equity Fund acquired the shares for $61.5 million.
The proceeds from that sale were subsequently reinvested to drive the retailer’s nationwide expansion.
