The Kenya Revenue Authority (KRA) is set to collect Sh3.5 billion from troubled sugar miller Mumias Sugar. This is after the taxman got the greenlight from the Tax Appeals Tribunal to collect the amount of unpaid taxes.
“Guided by the foregoing analysis, authorities, Section 56 (1) of the Tax Procedures Act and Section 30 of the Tax Appeal Tribunal Act, the tribunal thus finds and determines that the Appellant failed in discharging its burden of proof that the Respondent’s assessments were not justified,” the tribunal ruled.
The tax battle between KRA and Mumias sugar began on August 22, 2023 when the taxman wrote to the Mumias receiver manager PVR Rao declaring that it wanted to conduct an audit on the miller’s books. In September 2023, the taxman then issued an assessment notice to the miller which contained a demand for Sh16,177,566,678 in tax arrears.
The miller’s receiver managers objected this demand on November 30, 2023. Two months later, in January 2024, KRA reduced the demand to Sh3,510,517,137 but counter-objected to the earlier objection that had been raised by Mumias.
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On February 21, 2024, Mumias’ new [and current] receiver manager Harveen Gadhoke petitioned the Tax Appeals Tribunal to overturn the demand by the KRA.
The taxman told the tribunal that the tax demand was raised after KRA noticed that there were variances on Mumias Sugar’s turnover as captured on Income Tax and that of Value Added Tax. KRA added that the receiver manager had failed to file the miller’s annual returns for various tax heads that included corporate income tax, PAYE (Pay-As-You-Earn), excise duty, VAT, withholding tax and back taxes.
According to the taxman, the receiver manager had been managing a business [Mumias Sugar] and earning an income from it while dealing with taxable service and excisable goods for which Mumias ought to remit taxes.
