Bamburi Cement, a prominent East African cement firm partly owned by Kenyan industrialist Baloobhai Patel, has successfully settled approximately 60 percent of its Ksh288 million ($2 million) in accrued tax interest and penalties.
The tax dispute settlement is a pivotal moment for Bamburi Cement, resolving a long-standing assessment related to transfer pricing. It prompted The Kenya Revenue Authority (KRA) to waive Ksh115.2 million ($0.8 million) in interest and penalties through the ongoing tax amnesty program.
This milestone comes years after the cement maker reached a settlement agreement with KRA within the Alternative Dispute Resolution framework for the assessment period spanning 2007 to 2011.
In that previous agreement, Bamburi Cement paid the agreed principal tax totaling Ksh332 million (approximately $2.2 million) related to corporate tax, along with an additional principal of Ksh40.6 million (approximately $0.27 million) covering the years 2014 to 2021.
Earnings plummet as corporate tax issues impact Bamburi Cement
In a similar scenario in Uganda, Bamburi Cement experienced a significant downturn in its earnings during the first half of 2023, primarily due to the resolution of corporate tax issues.Â
The company’s earnings were notably impacted by a substantial increase in taxes, surging from Ksh29 million (approximately $200,000) to Ksh533 million ($3.67 million), representing a remarkable 86 percent of the firm’s $4.27-million pre-tax profit.Â
This development in Uganda follows a tax demand of Ksh956 million ($6.58 million) that Bamburi Cement faced in 2022. The exact settlement amount remains undisclosed; however, the company’s financial statement indicates that the profit after tax was adversely affected by the resolution of corporate tax matters in Uganda.
Baloobhai Patel’s stake in Bamburi Cement is worth $2.25 million
Bamburi Cement, recognized as one of the leading cement companies in East Africa, has earned its reputation for pioneering innovative construction solutions and ensuring sustained growth in its operations.
Patel, a Kenyan multimillionaire with diverse investment interests, holds a 4.12-percent stake in Bamburi Cement through his private investment company, Aksaya Investment Limited.Â
As of the end of trading on the Nairobi Securities Exchange today, Nov. 6, Bamburi Cement shares closed at Ksh22.8 per share. This resulted in a market capitalization of Ksh8.28 billion ($54.7 million) for the company. Presently, Baloobhai Patel’s stake in the company is valued at Ksh341.14 million ($2.25 million).Â
Patel’s influence extends beyond Bamburi Cement, as he also holds stakes in notable entities like the financial services provider Sanlam and the industrial gases giant Carbacid, highlighting his status as a seasoned investor.
