The National Assembly Departmental Committee on Finance and National Planning chaired by Hon. Kimani Kuria met the management of a liquor manufacturing firm  over a Kshs. 332 million tax abandonment granted by the National Treasury in 2021.

The management of London Distillers Limited is amongst those being investigated over irregular tax waivers granted by the National Treasury and the Kenya Revenue Authority (KRA). Earlier, the Committee resolved to undertake the probe when during the review of the performance of KRA and the implementation of the Excise Duty (Excisable Goods Management ( Amendment) Regulations, 2023 among other tax heads, they noted a huge tax abandonment granted by Government officials.

LDK Ltd management led by the Chairman, Mr. Mohan Galot told the Committee that a raft of challenges among them poor business performance,nonpayment by their distributors as a result of the effects of Covid-19 among others, led to their application for tax abandonment with success.

They revealed to Members that the then Treasury Cabinet Secretary convinced by the firm’s plight, also waived by 100 per cent, interest and penalties accrued from the unpaid excise duty. They were asked to pay Kshs. 80 million representing 20 per cent of the total tax owed (Kshs.400 million) which they promptly paid. 

The company officials further put blame on dealers of illicit brew whom they observed had dealt their business a dead blow. They told the Committee that currently the company is operating on a loss having halted business due lack of molasses, their key ingredient, after sugar factories across the country closed down to undertake regular maintenance for four months. 

Further, the officials told Members that in March this year, the National Treasury wrote informing them that their request for tax abandonment had been revoked and that they were required to engage with KRA to discuss how they would settle the balance totaling to Kshs. 332 million. According to the company's senior manager Ms. Emma Opondo they have since paid Kshs. 95 million.

However, Hon. Kuria noted that excise duty is taxpayers’ money held by the company on behalf of KRA, as a result of the declaration of sale made by the company. 

“Excise duty is money you collect as an agent of KRA. You only generate that levy when you declare that you have made a sale. Why would you therefore seek abandonment of monies that you have declared sale for? If every company in Kenya made an excuse such as yours, would anyone honour tax obligations? Hon. Kuria asked.

Members further observed that during the Covid-19 pandemic, the worst hit businesses did not include firms dealing with alcoholic drinks, but rather hotels and restaurants, whom the lawmakers noted were not among those who had applied for tax waivers.