Joseph Bonyo
5 October 2008
Nairobi — Differences between Mumias Sugar Company and its outgrowers are set to re-emerge following its appointment as the taxman's agent.
In a letter to the sugar miller, the Kenya Revenue Authority has given Mumias Sugar the mandate to collect Sh18.5 million owed to it by an outgrower's company in tax arrears.
"I hereby declare you to be agent of the above person (Mumias Outgrowers Company Limited) and require you to pay the sum being tax due, from any money which at any time within 12 months of this date may be held by you for or by you to the said person," reads the letter signed by Ms Alice Owuor, a senior deputy tax commissioner.
The two institutions have been at war in the past months over the amount of money to be paid for sugarcane deliveries with the miller accusing the outgrower of inciting farmers against delivering cane to the factory.
Outgrowers have, however, been demanding that the miller pays farmers Sh2,500 per tonne of cane up form the current Sh2,300.
In a notice to the farmers sometimes last month, the company had advised them to stop delivering sugarcane to Mumias. It further wanted payments to be backdated to November 2007.
Malicious move
Dr Evans Kidero, the managing director of Mumias Sugar then termed the move malicious and threatened the management of Moco with a suit in case of a boycott.
The new grounds for confrontation between the institutions now puts the miller at an advantage point over its foe.
Under Section 96 of the Income Tax Act, the listed firm can decide to pay the amount due to the taxman from any of the arrears it holds belonging to the farmers.
As a result, the outgrowers company may end up losing in relation to the complaints it had raised against the miller .
"Subject to sufficiency of such moneys, payment should be made by you immediately," added Ms Owuor in the letter dated October 3. However, in the event that the miller defaults in payment of this amount, the tax may be recovered by KRA from it under the provisions of the same Act.
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