Mumias Sugar Company has suffered another setback after the Tax Appeals Tribunal granted the Kenya Revenue Authority (KRA) the green light to recover Sh3.5 billion in unpaid taxes from the struggling miller.

This latest development deepens the uncertainty surrounding the once-thriving miller, which has been battling financial distress for over a decade.

The taxman had raised concerns over Mumias Sugar's failure to settle various tax obligations, including income tax, Pay-As-You-Earn (PAYE), withholding tax, excise duty, and value-added tax (VAT), spanning a decade from 2013.

The company’s receiver manager was expected to challenge the tax claims but did not provide supporting evidence to counter KRA’s assessment.

In response to the case, the receiver manager argued that pre-receivership financial records were inaccessible and that the tax assessments contained errors.

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However, the tribunal led by its chairperson Robert Mugambi rejected the appeal, noting that no sufficient proof was presented to dispute KRA’s claims.

"The Appeal be and is hereby dismissed. The Respondent’s Objection Decision issued on January 23, 2024 be and is upheld and each party should bear its costs," read part of the ruling delivered by tribunal.

Mumias Sugar’s tax challenges stretch back several years. Initially, the company was informed of tax arrears amounting to Sh10.35 billion for the period 2013–2019.

Later, a reassessment covering 2016 to July 2023 raised the figure to Sh16.18 billion.

The breakdown indicated that Sh13.86 billion related to pre-receivership obligations, while Sh2.32 billion covered the period afterward.

Following an objection, the final confirmed tax amount was reduced to Sh3.51 billion.

This financial blow adds to the series of troubles that have plagued Mumias Sugar since the 2012/2013 financial year when it began recording heavy losses.

By 2018, the company had collapsed under a debt burden of Sh39.44 billion. Its outstanding loans, including principal amounts and accrued interest from both government and private lenders, stood at Sh12.59 billion as of June 2018.

Despite various interventions, including efforts by President William Ruto, the company’s revival remains uncertain.

With this latest ruling, Mumias Sugar now faces the difficult task of settling its outstanding tax bill even as it struggles to regain its footing in the sugar industry.