A leading shareholder in Kenya’s largest supermarket chain, Naivas, has raised the alarm over potential job losses as a Ksh777 million tax dispute with the Kenya Revenue Authority (KRA) escalates.

The heir to the family-owned retail empire, which has grown to dominate the country’s formal retail space, says the ongoing tax wrangle could have serious consequences for the business and its employees.

At the heart of the dispute is KRA’s claim that the Naivas shareholder failed to pay taxes related to a stake sale that occurred during a major private equity investment deal.

According to KRA, the shareholder owes taxes on capital gains arising from the sale of shares during a multibillion-shilling transaction involving international investors.

The Naivas heir, however, has challenged the tax demand, arguing that the assessment is excessive, lacks legal merit, and fails to consider exemptions and technicalities surrounding the structuring of the deal.

Legal proceedings are ongoing at the Tax Appeals Tribunal, where the shareholder has sought relief and a suspension of enforcement measures by the tax authority.

In a statement, the shareholder warned that if the tax demand is upheld without consideration for the broader implications, it could negatively impact the retail chain’s operations, lead to cost-cutting measures, and possibly result in layoffs.

He argued that although the tax claim is directed at him personally, the financial strain could ripple through the business, especially if enforcement measures such as asset freezes or forced sales are pursued.

Naivas employs thousands of workers across its extensive branch network in Kenya and has been hailed as one of the few local retail success stories in a sector previously dominated by collapsed chains.

The retailer has rapidly expanded in recent years following capital injections from global investors, which helped it scale operations and modernize stores.

KRA maintains that all individuals and businesses must comply with tax laws, regardless of their profile or industry position.

The outcome of the case is likely to set a precedent on how tax authorities interpret capital gains and shareholder obligations in private equity transactions involving Kenyan companies.

The tribunal is expected to issue a ruling in the coming months, a decision that could have wide-ranging effects for both investors and high-net-worth individuals navigating Kenya’s evolving tax landscape.