Naivas Heir Warns 2,000 Employees Could Lose Jobs as KRA Demands KSh 777m Tax
- Naivas Supermarket Limited heir Peter Mukuha Kago is involved in a tax dispute with the Kenya Revenue Authority
- The dispute concerns the financial operations of a firm that provides hiring and recruitment services to the retailer
- Kago argued in court why the taxman should not demand the KSh 777 million in tax, noting that it would lead to massive consequences
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Japhet Ruto, a journalist at TUKO.co.ke, has more than eight years of experience reporting on finance, business, and technology, offering insights into economic trends in Kenya and globally.
Naivas Supermarket Limited heir, Peter Mukuha Kago, is involved in a KSh 777 million tax dispute with the Kenya Revenue Authority (KRA) over the financial operations of a firm that provides hiring and recruitment services to the retailer.
Source: Twitter
The case, which is still pending in Nairobi's High Court Commercial Division, concerns KRA's demand that Achievo Limited pay KSh 777,092,137 after an audit of its financial records.
Why did Peter Kago warn of job losses?
Achievo Limited's director, Kago, who is Naivas's chief operations officer, contests the tax assessment and fears that the company may be wound up.
He noted that at least 2,000 employees at the retail chain would lose their jobs if the taxman collects the money.
"There is no legal foundation for the outrageous tax liability of KSh 777,092,137, and the appellant/applicant (Achievo Limited) fears that the respondent may start execution proceedings unless the motion is approved and a stay is granted. More than 2,000 workers nationwide will eventually lose their jobs as a result of this, which might have far-reaching effects, including closing the appellant/applicant enterprise," he stated in court papers, as reported by Business Daily.
However, the KRA sent agency letters to the company's bank accounts in response to the Tax Appeals Tribunal's ruling that permitted the tax demands.
According to court documents, after the corporation objected, the KRA lowered the initial request of KSh 962.7 million.
After the Tax Appeals Tribunal rejected the company's appeal, the matter went to trial.
Source: Twitter
How is Achievo involved with Naivas?
According to Kago, the company's primary business activity is providing Naivas Limited with outsourced human resource (HR) support services.
It hires employees and assigns them to work for Naivas grocery outlets on behalf of the supermarket under a Service Level Agreement (SLA).
"The respondent has imposed value-added tax (VAT) on salary disbursements and related penalties on the appellant/applicant in violation of Section 13(5) of the VAT Act," Kago claimed.
The referenced clause of the VAT Act stipulates that funds received as disbursements to an agent or supplier should be subtracted from the taxable value of any services when determining their taxable value.
Why are Naivas siblings fighting?
Earlier, TUKO.co.ke reported that Newton Kagira, Naivas heir, received approval from the Court of Appeal to renew the case against his father's estate managers, David and Grace Kimani.
Kagira argued that their father, Peter Kago, did not have a will that addressed how the assets were to be divided.
His siblings denied the allegation, and the High Court rejected it after finding the will to be valid.
Proofreading by Asher Omondi, copy editor at TUKO.co.ke.
Source: TUKO.co.ke
