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Mumias faces Sh1bn sugar export tax bill

Mumias Sugar
The Mumias Sugar. FILE PHOTO | NMG   

Troubled sugar miller Mumias #ticker:MSC owes the Kenya Revenue Authority (KRA) more than Sh1 billion in unpaid taxes and interest accrued, Parliament heard on Thursday.

KRA commissioner-general John Njiraini told the National Assembly’s Committee on Implementation that the agency has re-issued a demand notice to Mumias seeking payment of taxes on exports that the company made under former managing director Evans Kidero.

The massive tax bill was due from VAT payable on the exported sugar and accrued interest.

Mr Njiraini said Mumias had failed to prove that it exported the consignment even after making a declaration in KRA’s Simba System, forcing the authority to believe that the sugar was dumped in the local market.

“We have demanded the tax and where we feel evidence is not significant to prove fraud in court, we will levy tax and levy full penalty,” the taxman said adding that failure to respond to the re-issued demand notice in 30 days will lead to taking out the money from the sugar firm’s bank.

“If we don’t get money in bank, we will auction their property,” said Mr Njiraini.

The taxman said Mumias may have made the fictitious declaration to evade paying the 16 per cent value added tax (VAT) charged on non-exported products.

The committee had summoned Mr Njiraini for a brief on measures KRA has taken to implement a resolution of the House when it adopted a 2014 report of the Agriculture Committee on the Crisis Facing the Sugar Sector.

MPs reckoned that the current importation of contraband sugar said to contain heavy metals such as copper and lead would not have occurred had the resolution been implemented.

KRA was asked to explain why it had failed four years down the line to hold its staff, who were responsible for the loss of tax revenues amounting to Sh577 million, arising from fictitious exports of sugar at Mumias.

Mr Njiraini told lawmakers that KRA made the VAT and sugar development levy (SDL) assessments and demanded the taxes due from Mumias. “As we are unable to trace the original demand, we have re-issued the demand. The letter forwarding the easements together with copies of the assessments and workings are annexed hereto,” Julius Musyoki, the KRA Commissioner Customs and Border Control said.

The explosive report on the sugar crisis which the House adopted in February 2016, did not directly indict any individual but recommended far reaching actions against former management and board of Mumias Sugar.The probe team recommended that KRA be held responsible for loss of Sh577 million VAT revenue through fictitious exports of sugar.

Parliament then demanded that any person in the Mumias board and management or working with KRA who facilitated the fictitious exports between 2006 and 2012 be held accountable for abuse of office.

Mr Njiraini was also asked to explain why KRA allowed Mumias to import 10,000 tonnes of sugar when there was an oversupply of the commodity.

Mr Njiraini said Mumias was licensed to import the sugar from Sudan’s Kenana but mandated Dantes Peak Limited to import on its behalf through an agreement for supply.

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