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The common mwananchi in Kenya is overtaxed. You feel it when you buy fuel, when your electricity bill arrives, when you pick up maize flour at the shop. The money goes into the national budget, funding hospitals, schools, roads and, increasingly, servicing debt.
Meanwhile, some of the largest companies making billions on Kenyan soil have spent decades ensuring that as little of their profit as possible gets taxed here. On January 16, the Tax Appeals Tribunal handed down a ruling that suggests that this imbalance is finally being challenged. It upheld a Sh6.76 billion tax demand against Del Monte Kenya, and the implications stretch far beyond one company's balance sheet.
Del Monte Kenya is not a small operation. It sits on 10,000 acres in Thika employs thousands of people and is the engine behind Kenya's position among the world's top five pineapple exporters. Yet, when the Kenya Revenue Authority audited its books, what emerged was a picture of a company that had systematically undervalued its own output.
Del Monte Kenya was selling pineapples to its Swiss sister firm, Del Monte International GmbH, at a mark-up of just 4.83 per cent. KRA's position was straightforward: the farming, the processing, the quality control, the logistics, all of it happened in Kenya. The value was created in Thika. So why was the profit landing in Zurich?
This is the essence of what tax authorities call transfer pricing. When companies within the same multinational group trade with each other across borders, they set their own prices. The global tax rule, known as the arm's length principle, says these internal prices must match what unrelated companies would charge each other in the open market.
If Del Monte Kenya sold pineapples to an independent buyer in Switzerland, it would demand a proper market price. But when the buyer is a sister company, the price can be set artificially low, shrinking taxable profits in Kenya while fattening them in a lower-tax jurisdiction.
The tribunal agreed with the taxman. It dismissed Del Monte's appeal, upheld the Sh4.96 billion assessment covering 2019 to 2021, and added the Sh1.76 billion confirmed for 2018. Beyond export pricing, the tribunal disallowed Sh6.12 billion in inter-company recharges that Del Monte claimed but could not substantiate with source invoices.
It also struck down Sh888 million in interest deductions on loans from Del Monte Fund BV, ruling that the lender lacked the financial capacity to extend them. The loans totalled Sh6.55 billion and served no genuine commercial purpose. This is not a uniquely African story. Apple routed €110.8 billion through Irish subsidiaries over a decade, paying an effective tax rate of 0.005 per cent in 2011.
The profits flowed through a "head office" that existed only on paper, with no employees and no tax residence. The European Court of Justice ordered Ireland to recover €13 billion in September 2024. Starbucks paid just £8.6 million in UK corporation tax over 14 years on £3 billion in sales by routing royalties to the Netherlands and buying coffee from Switzerland at inflated prices.
In Africa, the consequences land differently. Zambia's fight against Glencore's Mopani Copper Mines dragged on for years before the Supreme Court ruled for the revenue authority in 2020, ordering the company to pay roughly $13 million.
An Oxfam investigation had estimated Zambia was losing $102 million annually to Glencore's mispricing. The recovery barely scratched the surface. Africa loses $ 88.6 billion every year to illicit financial flows. From 1980 to 2018, sub-Saharan Africa bled $1.3 trillion to capital flight and profit shifting.
The Del Monte case crystallises why this matters for ordinary Kenyans. Profits are treated as private property belonging to shareholders in Zurich and London. But the costs of operating in Kenya, the land, the infrastructure, the public services that sustain the workforce, those costs are shared by everyone. When a company prices its exports to minimise taxable income locally while drawing on every public good the country provides, it is transferring wealth offshore, leaving the bill for citizens who have no equivalent escape route.
Kenya's path to this ruling was not accidental. In 2005, KRA lost its first transfer pricing case against Unilever Kenya, which had been selling goods to its Ugandan subsidiary at prices roughly 25 per cent below market.
The court ruled Kenya lacked the framework to mount the challenge. Within a year, Kenya issued its first Transfer Pricing Rules.
By 2009, a dedicated audit unit was operational. The Del Monte judgment is the fruit of that labour. Whether it holds is another matter. Del Monte will appeal, and the case could travel through the courts for years. But the precedent is set, and across Africa, revenue authorities are watching. The question is no longer whether governments can identify the problem. It is whether they can sustain the resolve and capacity to make it stick.
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The writer is a whistleblower, strategy consultant and startup mentor. www.nelsonamenya.com
