British American Tobacco Kenya (BAT Kenya) has denied claims of financial discrepancies amounting to KSh 9.6 billion (US$ 93 million) following a recent investigative report that scrutinized the company’s tax records.
The report, titled Missing Millions: A Cross-Examination of British American Tobacco Kenya’s Tax Bill, was published by The Investigative Desk in collaboration with the Tobacco Control Research Group (TCRG) and Tax Justice Network Africa (TJNA).
According to the findings, BAT Kenya may have underreported revenue between 2017 and 2018, potentially leading to a tax shortfall of approximately US$ 28 million.
Allegations of Tax Discrepancies
The report is based on an in-depth analysis of BAT Kenya’s financial disclosures over six years. Researchers cross-examined the company’s annual reports with production records submitted to the Kenya Revenue Authority (KRA), internal government documents, and market data on cigarette consumption and pricing.
Investigators allege a gap of KSh 9.6 billion between BAT Kenya’s declared revenues and estimated earnings based on production and sales data.
This shortfall suggests that millions of cigarette packs may have been either unaccounted for or underreported, raising concerns about possible tax avoidance or evasion.
“This report should be a wake-up call for Kenyan authorities. If these discrepancies remain unexplained, they could indicate potential tax manipulation,” said Kennedy Waituika, a fraud and internal audit expert.
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BAT Kenya’s Response
In a statement, BAT Kenya’s Managing Director, Crispin Achola, dismissed the allegations, asserting that the company fully complies with Kenya’s tax laws and financial reporting standards.
“We have thoroughly reviewed the report and found it to be largely speculative, containing numerous errors and misrepresentations of BAT Kenya’s operations,” Achola stated.
He emphasized that as a publicly listed company on the Nairobi Securities Exchange, BAT Kenya adheres to strict financial disclosure requirements and publishes audited financial statements in line with both local regulations and international reporting standards.
Claims of Miscalculations
BAT Kenya further criticized the report, arguing that the authors relied on incorrect assumptions when calculating the company’s revenues, profits, and tax obligations.
The company claims the report failed to consider deductible costs, applied incorrect cigarette pricing, and disregarded applicable trade margins.
Growing Scrutiny on Tobacco Industry Taxation
The allegations come at a time when governments worldwide are increasing scrutiny on the tobacco industry’s tax practices, particularly in low- and middle-income countries.
Tax experts argue that multinational tobacco firms often employ complex corporate structures and transfer pricing mechanisms to minimize tax liabilities, depriving governments of much-needed revenue for public health initiatives.
As the debate continues, the findings of the report may prompt further investigations by tax authorities and policymakers into BAT Kenya’s financial practices. The outcome could have significant implications for corporate taxation and regulatory oversight within Kenya’s tobacco industry.
