KRA

Multinational pineapple producer caught red-handed siphoning profits offshore while ordinary Kenyans shoulder crippling tax burden

The veil has been lifted on one of Kenya’s most brazen corporate tax scandals, with Del Monte Kenya now facing a KSh1.76 billion bill after a tribunal exposed how the multinational used shadowy offshore deals to rob the country of desperately needed public funds.

In a damning ruling that has sent shockwaves through Kenya’s corporate sector, the Tax Appeals Tribunal dismissed Del Monte’s appeal and upheld the Kenya Revenue Authority’s assessment, confirming what ordinary Kenyans have long suspected: some of the country’s biggest and most profitable companies are systematically cheating the tax system while workers and small businesses are squeezed to breaking point.

The case centers on transfer pricing, a complex financial maneuver that allows multinationals to manipulate the prices they charge their own foreign subsidiaries, artificially slashing their Kenyan profits and shifting billions to tax havens where rates are lower or non-existent.

KRA’s 2018 audit uncovered that Del Monte was using a cost-plus pricing model that grossly undervalued its Kenyan operations while funneling inflated profits to related companies abroad, particularly its Swiss affiliate DMI GmbH. The tribunal found the pineapple giant could not justify why it was earning modest returns in Kenya, where all the real work happens, while its offshore entities raked in the profits.

“The tribunal found that the pineapple giant could not justify why it was shifting profits to offshore companies when the real value of the business is created in Kenya,” the ruling stated, laying bare the mechanics of corporate tax abuse.

Del Monte had argued it was simply following a standard cost-plus approach, applying a meager 4.83 percent markup to its costs when selling to its Swiss sister company. The firm insisted this was fair compensation for its role as a manufacturer supplying a related distributor.

But the tribunal was having none of it. Judges ruled that Del Monte’s documentation failed to reflect the economic reality of its massive Kenyan operations. The company could not explain why the Kenyan business, which does all the planting, harvesting, processing and initial distribution, should earn only a pittance while foreign affiliates that simply handle onwards sales captured the lion’s share of profits.

The ruling also exposed Del Monte’s attempts to obscure its corporate structure. The company claimed a multi-billion shilling intercompany loan came from Del Monte Fund B.V., owned by its ultimate parent in the Cayman Islands, a notorious tax haven. But KRA presented registry records proving the lending entity was actually wholly owned by the Swiss affiliate, a finding Del Monte could not refute with official documentation.

The KSh1.76 billion that Del Monte sought to avoid paying could have transformed lives across Kenya. According to the Kenya Human Rights Commission, which welcomed the tribunal’s decision, that money could build 1,760 public school classrooms, construct eight fully equipped county hospitals, tarmac 29 kilometers of road, employ over 3,500 nurses or teachers for a year, or fund multiple rural water projects.

Instead, while Del Monte contested billions in taxes through expensive legal battles, ordinary Kenyans were being told to tighten their belts, accept higher VAT on basic goods, and pay new levies on essential services.

The Kenya Human Rights Commission pulled no punches in its response, accusing Del Monte and other multinationals of looting what rightfully belongs to Kenyan citizens.

“For years, ordinary Kenyans have been told to tighten their belts, pay more VAT, and accept new levies on basic goods and services. However, some of the country’s largest and most profitable corporations, like Del Monte, continue to contest paying billions in taxes aggressively. This is unjust and unacceptable,” the commission said in a scathing press statement.

The rights body warned that corporate tax evasion weakens the state’s ability to deliver basic services and shifts the tax burden onto workers, small businesses and low-income households. When multinationals dodge taxes, children sit in overcrowded classrooms, patients go without medicine, and communities lack clean water.

KHRC revealed it is now examining other corporations, focusing on the land they occupy, the terms of their leases, and what they actually pay in land rates and taxes. Early findings suggest the scale of revenue loss will shock many Kenyans, especially at a time when households are strained by PAYE, VAT and rising levies on basic necessities.

The commission is demanding sweeping reforms to stop multinationals from bleeding the country dry. It wants all foreign corporations operating in Kenya to publicly disclose their revenues, profits, taxes paid, number of employees and assets for each country where they operate. It is calling for a dedicated, well-resourced program for annual transfer pricing audits targeting high-risk sectors like agribusiness, extractives, manufacturing, energy and digital services.

Where aggressive tax avoidance is proven, KHRC insists penalties must go beyond mere recovery of tax and interest to include heavy punitive fines and possible criminal investigations. The commission wants strict restrictions on the deductibility of management fees, marketing fees, royalties, and interest on related-party loans unless companies can demonstrate clear economic substance.

It is also demanding publication of an annual list of the largest corporate taxpayers and companies with major unresolved tax disputes, joint work with the Ministry of Lands to establish a public register linking large landholdings to tax records, and active challenges to treaty shopping and artificial routing of payments through low-tax jurisdictions.

Most provocatively, KHRC wants companies with histories of aggressive tax avoidance barred from receiving tax incentives, accessing public procurement or benefiting from any form of state support.

The Del Monte case is not an isolated incident but part of a broader pattern. KHRC’s 2025 publication “Who Owns Kenya?” revealed how corporate tax abuse fuels inequality and leaves essential public services underfunded. The report showed that while multinationals employ armies of accountants and lawyers to minimize their tax bills, schools crumble, hospitals run out of drugs, and roads remain impassable.

Tax justice campaigners say Kenya loses billions annually to profit shifting by multinationals. A 2024 study estimated that African countries collectively lose around $88.6 billion per year to illicit financial flows, with transfer pricing abuse being a major component. Kenya is believed to lose between $1.1 billion and $1.5 billion annually, though the true figure may be higher given the opacity of multinational operations.

The global context makes Kenya’s predicament even more galling. Multinationals operating in Africa often pay far lower effective tax rates than their statutory obligations would suggest, using intricate structures involving subsidiaries in places like Mauritius, the Netherlands, Switzerland and the Cayman Islands to minimize their African tax footprint.

Del Monte Kenya has not publicly commented on the tribunal ruling or indicated whether it will seek further appeals. The company’s managing director Wayne Cook has previously defended the firm’s tax practices as compliant with Kenyan law.

But the tribunal’s decision suggests that era may be ending. Tax authorities worldwide are cracking down on transfer pricing abuses, and Kenya appears determined to claim its fair share of the wealth generated on its soil.

For the millions of Kenyans struggling with the rising cost of living, the Del Monte case crystallizes a profound injustice. While they pay tax on every shilling they earn and every item they buy, some of the wealthiest corporations doing business in Kenya deploy sophisticated schemes to avoid contributing their fair share to the country that provides their workers, their infrastructure, their markets and ultimately their profits.

The question now is whether the Del Monte ruling marks a turning point or remains an isolated victory in a long war against corporate tax abuse. With KHRC and other civil society organizations now turning their spotlight on other multinationals, and with KRA apparently emboldened by its tribunal win, more corporate tax scandals may soon come to light.

What is certain is that ordinary Kenyans are watching, and they are running out of patience with a system that squeezes the poor while allowing the powerful to game the rules. The Del Monte case has proven that when authorities have the will to act, corporate tax dodgers can be held to account. Now Kenyans want to see that will applied across the board, to every multinational that treats Kenya as a place to extract wealth rather than a country deserving of fair contribution to the common good.

The KSh1.76 billion Del Monte must now pay is not just a number on a balance sheet. It represents classrooms that can be built, hospitals that can be equipped, roads that can be paved, and services that can be delivered. It represents a small measure of justice in a system that has for too long favored corporate interests over the public good.

As the tribunal put it bluntly: multinationals cannot use paperwork to export profits when the actual work, risks and value addition happen on Kenyan soil. That principle, if consistently enforced, could transform Kenya’s fiscal landscape and ensure that those who profit from Kenya also contribute to Kenya’s development.

The battle is far from over, but for once, the people of Kenya can claim a victory.