Crisis in Mombasa as KRA freezes accounts

Mombasa County is facing a financial crisis after the taxman froze its three bank accounts over tax arrears amounting to Sh471 million.

The tax arrears, which include interest and penalties, were inherited from the defunct Mombasa council.

According to a letter dated April 23 and signed by Commissioner of Domestic Taxes Asha Salim, the council owed the Kenya Revenue Authority millions in tax arrears.

Ms Salim noted that the council failed to pay the taxes between January 2011 and March this year. On April 23, KRA gave the county 14 days to pay the arrears, or it would institute measures to ensure compliance.

The letter from KRA read in part: “Kindly make arrangements to pay Sh471 million within 14 days to avoid collection enforcement measures to recover the tax.”

Between May 28 and June 11, KRA, in letters signed by acting senior deputy commissioner E. Meyo, instructed the Kenya Commercial Bank, the Cooperative Bank and Central Bank to ensure any monies in the county accounts are paid to the tax department.

The letters indicated that the banks had been declared agents of Mombasa county.

“You are required to pay Sh471 million being tax due by the said taxpayer from any money at any time within 12 months from the dates of these notices,” the letters read.

But on Sunday, Mombasa Governor Hassan Ali Joho called on the national government and KRA to write off the tax arrears, saying, it is the defunct council which failed to pay the revenue.

Questioned why

“It is unfair for KRA to punish the new county officials while it was the defunct council which failed to pay the tax arrears,” he lamented.

The Kenya Local Government Workers Union Mombasa branch chairman, Mr Suleiman Mohamed, questioned why the revenue authority had not frozen the council’s account but targeted the county government instead.