A plant operator at Keroche Breweries supervises the production of Vienna Ice Strong Lager. May 2021 The decision by the Kenya Revenue Authority (KRA) to shut Naivasha-based Keroche Breweries over tax arrears of Sh323 million has brought to the fore the bruising brawl between the taxman and local brewers.
KRA, whose perceived high-handedness has seen it moot plans to drop the word “Authority” for “Service,” is once again in the eye of the storm for allegedly frustrating the country’s only indigenous brewer.
“This has drained all our resources. It is a bad position to be in,” said an emotional Tabitha Karanja, the CEO of Keroche, who together with her husband Joseph Karanja, humbly started the brewery at their home with a seed capital of Sh500,000. At its inception in 1997, the firm focused on the middle and low-income earners with its low-priced brand of spirits, before venturing into beer, an area dominated by the East African Breweries Ltd (EABL). Their first beer, Summit Lager, was launched in October 2008.
“If nothing is done in the next seven days, we will be forced to drain down all the beer and lay off over 250 direct employees and thousands within our nationwide distribution network,” said Karanja.
KRA, which has been at loggerhead with the Keroche since 2003 over tax arrears, insists it is only doing its work.
KRA had not responded to our request for comment by the time of going to press. However, in the past, the taxman has maintained that its role includes trade facilitation and that it is not its intention to shut down businesses.
In March 2020, as the country grappled with the Covid-19 pandemic, the tax appeals tribunal made a ruling on the long-running tax dispute between Keroche and the taxman, ordering the brewer to pay up Sh9.1 billion in tax arrears.
The Naivasha-based brewer had opposed the charging of excise duty on one of its products, Vienna Ice, which it argued had been produced by diluting Crescent Vodka, a process that did not amount to manufacturing in any way.
While making its decision, the tribunal directed Keroche to pay Sh500 million as a condition for the taxman to lift the agency notice that had seen the brewer’s bank accounts frozen.
The High Court would, later on, reduce this figure to Sh323 million. Keroche would go back to the same court requesting a review.
Besides arguing that it is in the public interest that the plant […]