The Uganda Revenue Authority (URA) has taken control of Nakumatt Supermarkets main warehouse, seeking to recover $86,000 (Sh8.6 million) in unpaid taxes.
URA officials descended on Nakumatt’s Kampala-based warehouse, which is also the retail chain’s headquarters in Uganda, on Wednesday taking control of distribution of goods to its five stores.
The revenue agency later took over the retail chain’s three stores in Kampala as part of the revenue recovery effort.
“The URA has sent several tax demands to Nakumatt in recent months with no success. Their officers have now moved in seeking to recover the outstanding amount,” a source familiar with the matter told the Business Daily.
URA said its action means it will appropriate all the income Nakumatt makes from the five outlets until the tax arrears are cleared.
The unprecedented administrative action also saw the URA seize several Nakumatt trucks that had recently made deliveries to the Kampala warehouse from Kenya.
Doris Akol, the URA commissioner-general, declined to comment on the matter while Atul Shah, Nakumatt’s managing director, did not pick our calls or respond to text messages.
Nakumatt, which is facing a crisis due to a mountain of debt and delays in securing an investor, has since the year began closed several stores in Uganda and Kenya.
In Uganda, aggrieved suppliers and landlords have sued the retail chain seeking to recover about Sh515 million in unpaid invoices and rent arrears.
Uganda’s minster for veterans, Bright Rwamirama, in mid-June took Nakumatt to court seeking to be paid Sh58.6 million in rent arrears he, and other partners, are claiming from the retailer for use of their premises in Mbarara.
Knight Frank Uganda, the property manager of the Acacia Mall, Village Mall and Victoria Mall, where Nakumatt was a tenant, took over their space on June 28, saying the retailer was “not adding much value to the three shopping malls.”
The URA’s decision to take control of the retailer’s Ugandan operations, and give itself first priority on all income, is set to exacerbate Nakumatt’s troubles with other creditors who are already short on patience.
Nakumatt was expecting a six-week phased injection of Sh7.7 billion from an unnamed private equity fund beginning March.
Failure to secure the funding has caused widespread product stockouts and seen it delay employees’ pay, prompting demonstrations and court action from the financially-strained workers.
The retailer’s gross debt more than tripled to Sh15 billion in February 2015 from Sh4.2 billion in 2011, piling pressure on operations and resulting in long payment delays to suppliers.
Nakumatt’s management recently announced plans to close several non-performing outlets to rein in its expenses and reduce the liquidity pressure it is facing.
Nakumatt, which also has presence in Tanzania and Rwanda, has since appointed audit firm KPMG to spearhead its restructuring.
The Kenyan government has stepped in to mediate negotiations between Nakumatt and its creditors, to resolve the debt crisis that has pushed it to near collapse.