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How KQ Employees Fired Between 2016 And 2019 Were Exempted From Taxes On Send-Off Perks

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All Kenya Airways (KQ) staffers that were declared redundant between July 2016 and last year did not pay taxes for their send-off packages, it has emerged.

At least 10 Kenya Airways (KQ) staffers were sent packing last year, with several senior employees having left the company within the aforementioned period.

During the period, former CEO Mbuvi Ngunze and former chairman Dennis Awori left the company, and are some of the beneficiaries of the scheme that was approved by the Ministry of Transport, Infrastructure, Housing and Urban Development and the Head of the Civil Service.

Other senior employees who left under the same scheme include Alex Avedi, the safety, corporate quality, security and environment chief, human resource boss Alban Mwendar, former finance director Alex Mbugua, chief operating officer Yves Guibert, Rick Sine (fleet director) and Gerard Clarke (commercial director).

Read: KQ Fortunes Continue To Dwindle As Airline Issues Profit Warning

The policy was gazetted in 2016 by the then Cabinet Secretary for Labour Ukur Yatani.

“In exercise of the powers conferred by Section 13(2) of the Income Tax Act, the Cabinet Secretary for National Treasury and Planning directs that the severance pay, salary in lieu of notice and payment of accumulated leave days paid to the ten employees of Kenya Airways Limited who were retrenched and left service between May 2019 and July 2019 shall be exempt from the provisions of the Act,” read the gazette notice.

It is not yet clear how much the employees received cumulatively, but the management confirmed the tax exemption, as quoted by Business Daily.

“The objective was to provide those members of staff whose roles were declared redundant to get better packages at the end of their employment. One of the requirements was that KQ would continue to provide the required details to the National Treasury,” said KQ.

KQ, which has cost taxpayers Ksh24.7 billion after shareholder  loan was written off by the government got a tax credit worth Ksh30 million in 2019 and  Ksh5 million in 2017.

In 2016, KQ paid Ksh126 million as taxes to the Kenya Revenue Authority and claimed a Ksh3.9 billion tax credit in 2015 compared to Ksh1.4 billion in 2014.

Read: KQ In Trouble As Uganda Airlines Launches Direct Flights Between Entebbe and Mombasa

The government could also be forced to pay $750 million (Ksh75 billion) that it has guaranteed for the airline from international creditors.

Currently, the government through the Treasury, owns 48.1 percent of the airline, with Dutch carrier KLM having a 7.8 percent stake. Kenyan banks control 38.1 percent while the rest is owned by the public.

Kenya Airways named Allan Kilavuka its acting CEO in December following the resignation of Sebastian Mikosz.

In December, KQ announced that its earnings for the year ending 2019 are expected to go down by 25 per cent or more compared to earnings reported in 2018.

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Written by Francis Muli

Senior reporter at Kahawa Tungu, Muli has a passion for human interest stories. He believes in unearthing societal rots that have been hidden from the public eye. He has also carved himself a niche in writing business stories. He has worked for various organisations including Kenya Television Service, Business Today among others. Follow him on Twitter @FmuliKE.
Email: [email protected]

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