How Treasury gave KQ staff tax-free send-off package

A Kenya Airways plane at JKIA. FILE PHOTO | NMG Kenya Airways #ticker:KQ employees and managers who were declared redundant by the company between July 2016 and last year were exempted from paying taxes on their send-off packages as part of a sweetheart deal to ensure that they died not challenge their redundancy. The deal also ensured that they took home more money.

Official documents, including a Kenya Gazette notice signed by Treasury Secretary Ukur Yatani last October, show that the government gave the listed airline’s management leave from income tax laws from July 2016 during which time numerous employees, including top executives, left the struggling airline.

The exemptions given in 2016 were approved by the Ministry of Transport, Infrastructure, Housing and Urban Development and approved by the Head of the Civil Service.

Among those who left during the period were former chief executive Mbuvi Ngunze and former chairman Dennis Awori. During the financial year ended July 2019, 10 senior employees left the national carrier.

Those declared redundant were exempted from paying tax on their severance pay.

Part of the condition for the redundant workers and managers to enjoy the exemption was that they would not be re-employed by the airline over the next five years after their retrenchment.

“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,” the CS said in the Gazette notice dated October 22.

The Business Daily could not immediately obtain the full amount of the send-off packages for the period.

Apart from Mr Ngunze and Mr Awori, other senior who have left KQ were 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).

Kenya Airways confirmed the tax exempt sendoff packages without providing details.

“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,” KQ’s Corporate Communications Department […]

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