The Kenya Revenue Authority (KRA) has received approval from the Tax Appeals Tribunal to collect Sh35 billion in unpaid taxes from troubled sugar miller Mumias Sugar, reports Bizna.
The tribunal ruled that Mumias Sugar failed to provide enough evidence to challenge KRA’s tax assessments. “Based on the analysis, relevant legal provisions, and applicable laws, the tribunal finds that the appellant did not prove that the tax assessments by the respondent were incorrect,” the ruling stated.
The tax dispute between KRA and Mumias Sugar began in August 2023, when KRA wrote to the miller’s receiver manager, PVR Rao, informing them of an upcoming audit. The following month, KRA issued a tax assessment notice, demanding Sh16.17 billion in arrears.
Mumias Sugar’s receiver managers objected to this demand on November 30, 2023. Two months later, in January 2024, KRA revised the demand down to Sh3.51 billion but still maintained that Mumias Sugar had outstanding tax obligations.
In February 2024, the newly appointed receiver manager, Harveen Gadhoke, challenged KRA’s tax demand before the Tax Appeals Tribunal, seeking to have it overturned.
KRA argued that the tax demand was based on inconsistencies found in Mumias Sugar’s financial records. The authority noted that there were discrepancies between the company’s income tax and Value Added Tax (VAT) filings. Additionally, the receiver manager had failed to submit annual returns for multiple tax categories, including corporate income tax, PAYE (Pay-As-You-Earn), excise duty, VAT, withholding tax, and other back taxes.
KRA maintained that the receiver manager had been running Mumias Sugar as a business, generating income while providing taxable services and selling excisable goods, and therefore, the company was required to pay taxes.
