Joint Committee Questions Discrepancies Of Figures Submitted By Stakeholders on Debt Owed By State Owned Sugar Companies
Members of a Joint Committee have raised concerns regarding discrepancies in the debt records of state owned sugar companies. The figures presented by the National Treasury, the Kenya Revenue Authority (KRA), and the public sugar millers have notable disparities, prompting Lawmakers to call for a thorough examination of the figures.
Documents submitted by the Kenya Revenue Authority reveal that Sony, Chemili, Muhoroni, Nzoia and Miwani Sugar Companies owe Kshs 16.37B in taxes, penalties and interest. This varies from the figures in the National Treasury Memorandum of Kshs 50.14 B.
The National Assembly Committees on Agriculture and Livestock and the Committee on Finance and National Planning co chaired by Hon. Dr. John Mutunga(Tigania West) and Hon. Kuria Kimani (Molo) is undertaking stakeholder engagement on the revival and commercialisation of State Owned Sugar Mills.
In a meeting with the Kenya Revenue Authority led by Commissioner General, Mr. Humphrey Mulongo, Members were informed of the status of taxes and tax penalties owed by sugar companies and the recent change in tax write-off regulations.
In his submissions, the newly appointed Commissioner General informed the Committee that Sony, Chemili, Muhoroni, Nzoia and Miwani sugar mills are generally compliant and up-to-date with Value Added Tax (VAT) and Pay As You Earn (PAYE) return filings. However, they frequently file corporation tax returns late, often requiring intervention by the Tax Service Office.
According to Article 210 of the Constitution taxes can only be waived by law, which means KRA can only do so pursuant to written provisions of the law. Following, enactment of Finance Act 2023,included amendments to tax write-off provisions that resulted in the Kenya Revenue Authority no longer having the authority to write off tax debts.
However, the Finance Act, 2023 introduced a Tax Amnesty on Interest and Penalties for periods up to December 31, 2022, running from September 1, 2023, to June 30, 2024 which allows taxpayers to take advantage of this amnesty by settling their outstanding principal taxes accrued up to December 2022, after which penalties and interest for those periods will be waived.
Members of the Joint Committee acknowledged that to address the financial challenges faced by state owned sugar mills in meeting their tax obligations, the Government through the National Treasury should consider settling the principal tax within the amnesty period to facilitate restructuring.
In another meeting, Mr. Lawrence Kibet, Director General, Public investments and Portfolio, National Treasury was put to task by Members to provide details on the proposed debt write off as outlined in the Treasury Memorandum, legislators questioned the figures submitted by the National Treasury.
“Where are the audited accounts of these mills? Have you conducted a forensic audit? We have seen discrepancies between your figures as Treasury and those presented by management of millers,” asked Konoin MP, Hon. Brighton Yegon.
Critically, Members of the Joint Committee raised concern with the Treasury Memorandum which does not include provisions for paying farmers’ arrears and workers’ salaries. MPs argued that without addressing these debts, the commercialization effort may falter.
Members of the Joint Committee directed the representatives from the Treasury, State owned Sugar Companies and Kenya Revenue Authority to develop a comprehensive document detailing the debt owed by the companies and providing evidence.
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