The Uganda Revenue Authority (URA) has
taken control of Nakumatt Supermarkets main warehouse, seeking to
recover $86,000 (Sh8.6 million) in unpaid taxes.
URA
officials descended on Nakumatt’s Kampala-based warehouse, which is also
the retail chain’s headquarters in Uganda, on Wednesday taking control
of distribution of goods to its five stores.
The revenue agency later took over the retail chain’s three stores in Kampala as part of the revenue recovery effort.
“The
URA has sent several tax demands to Nakumatt in recent months with no
success. Their officers have now moved in seeking to recover the
outstanding amount,” a source familiar with the matter told the Business Daily.
URA
said its action means it will appropriate all the income Nakumatt makes
from the five outlets until the tax arrears are cleared.
The
unprecedented administrative action also saw the URA seize several
Nakumatt trucks that had recently made deliveries to the Kampala
warehouse from Kenya.
Doris Akol, the URA
commissioner-general, declined to comment on the matter while Atul Shah,
Nakumatt’s managing director, did not pick our calls or respond to text
messages.
Nakumatt, which is facing a crisis due to a mountain of
debt and delays in securing an investor, has since the year began
closed several stores in Uganda and Kenya.
In
Uganda, aggrieved suppliers and landlords have sued the retail chain
seeking to recover about Sh515 million in unpaid invoices and rent
arrears.
Uganda’s minster for veterans, Bright
Rwamirama, in mid-June took Nakumatt to court seeking to be paid Sh58.6
million in rent arrears he, and other partners, are claiming from the
retailer for use of their premises in Mbarara.
Knight
Frank Uganda, the property manager of the Acacia Mall, Village Mall and
Victoria Mall, where Nakumatt was a tenant, took over their space on
June 28, saying the retailer was “not adding much value to the three
shopping malls.”
The URA’s decision to take control of
the retailer’s Ugandan operations, and give itself first priority on all
income, is set to exacerbate Nakumatt’s troubles with other creditors
who are already short on patience.
Nakumatt was expecting a six-week phased injection of Sh7.7 billion from an unnamed private equity fund beginning March.
Failure
to secure the funding has caused widespread product stockouts and seen
it delay employees’ pay, prompting demonstrations and court action from
the financially-strained workers.
The
retailer’s gross debt more than tripled to Sh15 billion in February
2015 from Sh4.2 billion in 2011, piling pressure on operations and
resulting in long payment delays to suppliers.
Nakumatt’s
management recently announced plans to close several non-performing
outlets to rein in its expenses and reduce the liquidity pressure it is
facing.
Nakumatt, which also has presence in Tanzania and Rwanda, has since appointed audit firm KPMG to spearhead its restructuring.
The
Kenyan government has stepped in to mediate negotiations between
Nakumatt and its creditors, to resolve the debt crisis that has pushed
it to near collapse.
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