The troubled Mumias Sugar has been dealt a major blow after the Tax Appeals Tribunal allowed the Kenya Revenue Authority (KRA) to collect a sum of Ksh3.5 billion of unpaid taxes.
The tribunal arrived at the decision after the receiver manager of the company failed to challenge the assessment done by KRA and provide evidence.
KRA had raised concerns after the caretaker manager failed to pay various tax heads and file the miller's annual tax from 2013 to 2023.
The taxes issued to Mumias Sugar included income tax, Pay-As-You-Earn (PAYE), withholding tax, excise duty, and VAT.
Previously, the Mumias Sugar receiver manager had challenged the assessments, citing a lack of access to pre-receivership records and alleged errors in the tax calculations.
However, in its judgment, the tribunal dismissed the appeal finding that the receiver manager failed to provide sufficient evidence to prove the tax assessments were incorrect and that the tax assessments by the commissioner were justified.
"The Appeal be and is hereby dismissed. The Respondent’s Objection Decision issued on January 23, 2024 be and is upheld and each party should bear its costs," read part of the judgement by the tribunal chaired by Robert Mutuma Mugambi.
Mumias Sugar Company was notified to register tax arrears amounting to Ksh10,351,890,277 for the period 2013 - 2019. Later, an assessment notice demanded tax covering the period 2016 to July 2023 amounting to Ksh16,177,566,678.
The assessment was divided into two portions; Ksh13,855,257,864 related to prior assessment before receivership and Ksh2,322,308,814 covering the period after receivership. After an objection, the assessments were confirmed, amounting to Ksh3,510,517,137.
This fresh blow is adding up to the full bucket of troubles that the sugar company has been facing.
Mumias Sugar woes began in the 2012/2013 financial year when it started recording net losses before collapsing by the end of 2018 having incurred losses amounting to Ksh39.44 billion.
As at June 2018, the company's borrowing, principal loans and interests from in and out of government stood at Ksh12.59 billion. Efforts have been made by stakeholders including president William Ruto to revive the company.
