KRA Secures Major Victory as Tax Appeals Tribunal Upholds KSh 1.76 Billion Levy Against Del Monte Kenya Over Transfer Pricing Dispute

The Kenya Revenue Authority (KRA) has scored a significant win after the Tax Appeals Tribunal upheld a KSh 1.76 billion tax demand against Del Monte Kenya Limited. The ruling, delivered on January 16, 2026, dismissed the company’s appeal, confirming that its transactions with a Swiss affiliate were not conducted at market value.

The dispute dates back to a 2018 audit of Del Monte Kenya’s “transfer pricing” practices. The company, a leading pineapple grower and processor in Thika, sells its products to Del Monte International GmbH (DMI GmbH) in Switzerland, which handles marketing and distribution in Europe. KRA argued that the prices charged were not “arm’s length,” effectively shifting profits from Kenya to a lower-tax jurisdiction. Del Monte applied a 4.83% markup, claiming it fairly compensated its role as a grower and processor.

The five-member tribunal, chaired by Christine A. Muga, conducted a detailed Functional, Assets, and Risk (FAR) analysis. It found that the Kenyan entity bore the main operational responsibilities, risks, and assets, including plantations, processing plants, and market exposure. Emails and internal documents showed the Swiss affiliate played only a supporting role. The tribunal also rejected Del Monte Kenya’s Full Cost Mark-Up method as inappropriate, ruling that the Swiss entity’s “low value-adding services” should be benchmarked at a standard 5% markup.

Additionally, the tribunal disallowed millions of shillings in recharged costs for software, administration, and procurement due to lack of original documentation. A KSh 415 million interest expense on an intercompany loan from Del Monte Fund B.V. was also rejected because the company failed to justify the rate with comparable third-party evidence.

The tribunal concluded that Del Monte Kenya was under-rewarded for the complex and risk-bearing functions it performed locally. It upheld KRA’s assessment of KSh 1.76 billion, including principal tax, penalties, and interest, and ordered each party to bear its own costs.

This ruling underscores KRA’s commitment to enforcing proper transfer pricing compliance. It also ensures multinational companies operating in Kenya fairly report profits and pay taxes for the value created within the country.