Troubled retail chain Nakumatt owes Kenya Revenue Authority (KRA) Sh. 2.3 billion in unpaid taxes as details emerged when the retailer fell into trouble.
The KRA told the Senate committee on Trade and Investments that troubles at Nakumatt started from July 2016 when its financial problems led to empty shelves and store closures, hurt by mounting supplier and bank debts.
The committee is probing reasons behind the near collapse of retail outlets including listed Uchumi Supermarkets.
“Indeed our problems with Nakumatt do not date back many years. We collected about Sh. 1.5 billion from Nakumatt in 2015/16 and Sh. 1.3 billion in 2014/15 financial year,” said the KRA.
The taxman said the trouble started in the financial year 2016/17 when the total annual collection from Nakumatt dropped down to Sh. 761 million, just about half of the total taxes.
Nakumatt owes creditors including landlords and suppliers as much as Sh. 40 billion, and has shut several branches in the race to remain afloat.
John Njiraini, the KRA commissioner-general, said the authority did implement the 2017 gazette notice that sought to auction Nakumatt properties to recover the Sh. 2 billion because the government was working on a rescue plan. Mr Njiraini told senators that Nakumatt failed to honour two conditions that would have seen the KRA relax demand for payment of outstanding taxes.
“I sat with then KCB appointed receiver manager for Nakumatt in 2016 to agree on tax payment plan. They wanted elongated period for recovery to pay the tax and we couldn’t accommodate because our polices allowup to six month or at most a year to pay taxes. They were not able to do that,” he said.
Mr Njiraini said the KRA and Nakumatt then agreed to establish a special account to handle taxes before the plan collapsed.