KRA reveals Keroche’s Sh22bn tax bill in brewer’s survival fight

Keroche Breweries chief executive officer Tabitha Karanja. FILE PHOTO | NMG The Kenya Revenue Authority (KRA) has disclosed that the troubled Naivasha-based Keroche Breweries owes it Sh22.79 billion in unpaid taxes, darkening the future for the brewer that challenged the mighty East African Breweries (EABL) .

The taxman in an unprecedented move offered a blow-by-blow account of the 16-year-long battle with Keroche, including details of unpaid corporate tax, excise duty, VAT and penalties of Sh3.02 billion.

The KRA’s revelation was in response to Keroche’s plea for President Uhuru Kenyatta’s intervention after the authority shut the operations of the beer maker and froze its dealings with 36 banks, further exacerbating the situation.

Keroche, owned by the Karanja family, linked its woes to a Sh351 million demand. But the KRA painted the brewer as a cheat who owes the State over Sh22 billion in unpaid taxes.

At Sh22.79 billion, the taxman is demanding what is a near equivalent of the Sh24.9 billion that Safaricom , East Africa’s most profitable company, paid the KRA. It is more than the market value of Kenya Airways and the combined worth of nearly half of the firms listed on the Nairobi Stock Exchanges (NSE) .

The KRA accuses Keroche of defaulting on agreed plans to clear the tax arrears, including a deal to pay half a billion shillings monthly from December to clear a Sh4.49 billion debt.

“Keroche has not honoured the payment of instalments as per the agreements,” said the KRA in a statement.

The Sh4.49 billion was part of a Sh7.54 billion tax demand, which included penalties of Sh3 billion. Keroche appealed to the Treasury to write off Sh3.99 billion on agreement it would pay the Sh4.49 billion. The Treasury is yet to respond to the request.

The KRA crackdown is a blow to Keroche that hoped to tap a spring of consumer patriotism among Kenya’s growing middle class to munch into EABL’s market share on the back of its Summit Lager and Summit Malt beers.

EABL, majority-owned by Diageo, has dominated the market with products like Tusker and Guinness beers as well as Johnnie Walker whisky and Smirnoff vodka. It swept aside London-based SABMiller in Kenya during the beer wars of the late 1990s.

Keroche’s entry saw analysts talking of “Beer Wars 2”, which now looks unlikely should the KRA press with the multi-billion shilling tax demand.The finances of Keroche, a private company, are not publicly available but it is expected to […]

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