KRA freezes GNLD’s bank accounts in tax demand

KRA writes to the South African food company’s Kenyan bank, which it appoints as an agent and demands at least Sh131 million in taxes.

A popular global food and nutrition company with offices in Nairobi has had its bank accounts frozen on allegations of tax evasion by the Kenya Revenue Authority (KRA).

In a letter earlier this year to Neolife International Limited, makers of popular GNLD health brands, KRA accuses the company of under-declaring its stocks portfolio, which resulted in it paying far less taxes than what it ought to have paid.

“In exercise of the powers conferred upon me by Section 131 of the East African Community Customs Management Act, I hereby declare you to be agent of the above mentioned taxpayer for the amount specified in this notice and require you to pay the Commissioner Customs Services Department the sum of Sh131,371,095 being duties due by the above taxpayer,” reads a letter from KRA Debt Enforcement Manager Asha Salim to a local bank.

“Please note that in case of partial payment, this notice shall remain in force until the amount specified herein is fully recovered.”

Correspondence from the bank to Neolife’s top management just four days after the KRA letter also confirms that the firm was in KRA’s cross-hairs.

“This is to notify you that we have been served with the attached letter where the Kenya Revenue Authority has appointed the bank to collect the sum… The bank has no option but to comply with the agency notice received unless advised otherwise by an order from court or KRA. We have therefore blocked all the balances in all your accounts,” reads an email from the bank’s relationship manager to Neolife.

The letter was also copied to the Neolife’s managing director. Neolife describes itself as a 50-year-old world’s leading nutritional company that originally set out to build a community of people who care about living well.

“Living well means more than enjoying good health. It means taking control of your health, taking charge of your personal development, and securing your financial future. In an age when individuals are faced with an overwhelming number of choices, we are honored that you would take time to take a closer look at GNLD, a company and community who shares, cares and strives to change the way you live,” reads a section of its website.

Firm’s popularity

It is through its GNLD products that the company’s popularity grew in the country from the late 1990s to the mid-2000s before it rebranded to Neolife.

Insiders at the company’s Nairobi offices, who spoke to the Sunday Standard on condition of anonymity, said the tax bill could be due to variances in the company’s sticker prices.

“The sticker per unit of some of the products on sale is significantly higher than the final price declared to KRA,” a source said. Even as the company faces tax queries, Neolife’s Nairobi office - based at ICEA Building on Kenyatta Avenue - has another revolt.

The company, which once promised distributors of its products almost instant success and has made news on several occasions following a high rewards’ scheme to its distributors, is facing a court battle by the people who were once its champions.

Some 11 distributors have threatened to take the company to court over what they say is a failure of the company to supply them with GNLD products months after they had paid for them.

“Our clients paid the said amounts through cash, M-Pesa and direct transfer. However, even after making the said payments our clients were not issued with any GNLD products, neither did you refund their money causing them to register a complaint with the police,” reads a demand notice from the traders.

The traders are looking to get products or their money, amounting to Sh676,000.

Workers also allege unfair treatment from their South African bosses whom they say are insensitive and often victimise anyone who speaks out against unfair employment practices.

Attempts to seek comments from Neolife’s top management on KRA claims and staff harrassment allegations did not bear fruit. Emails to the company bosses, based in Johannesburg, South Africa, went unanswered.