The ongoing troubles facing Mumias Sugar Company have taken a dramatic turn after the Tax Appeals Tribunal ruled in favor of the Kenya Revenue Authority (KRA), allowing the tax body to recover a staggering Ksh3.5 billion in unpaid taxes. The tribunal’s decision, delivered after careful consideration of the evidence, marks yet another financial hurdle for the once-thriving sugar miller that has been struggling to regain its footing.
The ruling was issued after the company’s receiver manager failed to successfully challenge KRA’s tax assessments and provide sufficient evidence to contest the tax demands. KRA had initially raised concerns regarding Mumias Sugar’s prolonged non-compliance, noting that the caretaker manager had not paid various tax obligations and had failed to file the company’s annual tax returns for an entire decade—spanning from 2013 to 2023.
According to KRA, the outstanding tax liability comprises multiple tax components, including income tax, Pay-As-You-Earn (PAYE), withholding tax, excise duty, and value-added tax (VAT). The tax authority argued that Mumias Sugar had consistently defaulted on these obligations, further exacerbating its already dire financial situation.
In an attempt to contest the claims, the receiver manager had previously mounted a legal challenge against KRA’s tax assessments, citing two key arguments: first, that the company had no access to pre-receivership financial records, making it difficult to verify the accuracy of the tax figures; and second, that there were significant errors in KRA’s tax calculations. The receiver manager further argued that since the company was under receivership, certain tax obligations should not be applicable.
However, in its final judgment, the Tax Appeals Tribunal rejected these arguments, ruling that the receiver manager had failed to present compelling evidence to prove that KRA’s tax assessments were incorrect. The tribunal further affirmed that KRA had followed due process in its assessment and that the tax liabilities were, indeed, justified. As a result, Mumias Sugar is now legally obligated to settle the Ksh3.5 billion tax bill, adding to its already mounting financial woes.
This ruling is a significant setback for the struggling miller, which has been under receivership since 2019 due to massive debt and mismanagement. Once Kenya’s largest sugar producer, Mumias Sugar has experienced a rapid decline over the past decade, with operational inefficiencies, corruption, and financial mismanagement leading to its downfall. Efforts to revive the company, including leasing its assets to private operators, have been marred by legal battles and stakeholder disputes.
With this latest ruling, the fate of Mumias Sugar hangs in the balance. The company must now either find a way to settle the hefty tax bill or risk further legal and financial consequences, including asset seizures or additional penalties. The tribunal’s decision reinforces KRA’s tough stance on tax compliance, sending a strong message to struggling corporations that tax obligations must be met regardless of financial difficulties.
As stakeholders continue to assess the implications of this ruling, questions remain about whether Mumias Sugar can withstand yet another financial blow or if this tax burden will accelerate its path to total collapse. The coming months will be critical in determining the company’s future and whether any viable solution can be found to salvage what was once a dominant force in Kenya’s sugar industry.
Related Content: Mumias Sugar Reconnects to the Grid after Three Years of Darkness
