K’Ogalo’s failure to remit income tax proves costly

Failure by Gor Mahia to deduct and remit income tax from players’ salaries has prompted Kenya Revenue Authority to demand Sh118 million from the club.

Last week, the taxman forwarded a demand note to Gor Mahia and went ahead to block the club’s accounts, putting the team in financial problems.

This turn of events means that if an amicable settlement is not reached soon, the club, which is yet to get a new sponsor, risks running into big financial problems.

The club’s monthly wage bill is slightly above Sh2.7 million and with no sponsors and frozen accounts, the club will find it difficult to pay players.

ACCOUNTS BLOCKED
In an interview with Daily Nation Sport on Wednesday, Gor Mahia chairman Ambrose Rachier confirmed that the accounts had been blocked and the club was walking on a tight rope.

“They (KRA) have blocked our money everywhere which has crippled club operations. We could as well close shop as we do not have any means to pay players,” Rachier said.

Club secretary-general Chris Omondi added: “Things are grim, the situation is bad and we are yet to figure the way forward.”

KRA wrote to Gor last week through its former sponsors Tuzo requiring the club to pay Sh118 million in income tax. The move by the taxman prompted Tuzo to withhold money meant to pay players’ salaries last month. The club however sought funds and paid players.

Omondi said that the issue of taxing players’ salaries is a “hot potato” that needed time to be address. “The issue of taxing players’ salaries is a hot topic. It is something I touched on when I ascended to office and should be handled carefully.”

Rachier added that club will issue  a comprehensive statement on the matter in the next two days as they are still consulting legal experts.

He cried foul, insisting that the league champions were being unfairly targeted as no other premier league club has been treated the same way.

“We are reading sinister motive in the move by KRA. Why just us. I mean there are 16 Premier League clubs, why just single out Gor Mahia? Rachier charged.

KRA'S TAKE

When contacted on Wednesday, KRA’s acting deputy commissioner Ezekiel Maru refuted Gor’s claims.

“KRA wishes to clarify that Gor Mahia is not the only club under compliance monitoring. As a matter of fact, some clubs have already made payment, while others are still under compliance check.

“The law as it stands today requires KRA to collect taxes on all incomes earned by sportspersons, including football clubs. However a number of football clubs were found not to be filing returns or paying relevant taxes (Pay As You Earn) for their employees and players. Gor Mahia was identified among others, as a non-compliant taxpayer in the football clubs focus group,” Marwa said in the statement.

However, it has since emerged that some of the 16 clubs in the top tier league have also not met their tax obligations regarding players’ salaries and allowances.