Taxman gives manufacturers two months to comply with tax rules

Industrialisation Cabinet Secretary Adan Mohammed during the commissioning and launch of the Keroche Breweries expansion on March 31, 2015 as CEO Tabitha Karanja (centre) looks on. Keroche is among the firms affected by KRA rules. [Photo: GOVEDI ASUTSA/STANDARD]

The Kenya Revenue Authority (KRA) has given manufacturers and importers of excisable goods among them Mumias Sugar Company and Keroche Breweries, that have not acquired licences, two months to comply.

The taxman said manufacturers who have faced difficulties accessing County Government letters of approval have a 60-day reprieve from the date of licensing. “Within this period, we expect all manufacturers to comply with the requirement and provide certified evidence that their respective factories are located in designated industrial areas,” said KRA said in a joint statement with the Kenya Association of Manufacturers (KAM) on Friday.

The statement signed by KRA Commissioner of Domestic Taxes Alice Owuor and KAM Chief Executive Phyllis Wakiaga said the tax collector is currently reviewing licences of 14 applicants who failed to submit requisite documentation to meet the statutory requirements.

On August 17, KRA published a list of 114 manufacturers and 62 importers that it said were cleared to continue operations after meeting the requisite ‘sin tax’ payment guidelines. Sin tax, widely known as excise duty is levied on consumption that is considered non-essential such as beer, cigarettes and spirits.

A minority missing on the list have not satisfied the requirements for compliance and are undergoing normal processing on a case by case basis, KRA said. Raila Odinga’s Spectre International is among tens of companies that are yet to secure an excise tax licence, putting thousands of jobs on the line.

Mumias Sugar and Keroche Breweries, both involved in the production of alcoholic drinks and related inputs, are the other top-tier firms that would have to cease operations in the newest purge by the tax collector. However, KRA said, “To safeguard jobs and ensure compliance with the law, the onus is on the unlicensed companies to strive and meet the licensing requirements.”

Meet requirements

It said within the past two weeks, 40 manufacturers and importers appealed for consideration from which KRA processes and issued licences to 26 applicants. “We are still engaging with the rest of the applicants (14) to provide the requisite documentation and meet the statutory requirements that will enable them achieve full compliance,” the statement reads in part. KRA warned consumers and distributors to avoid goods manufactured by non-compliant firms.

That means the unlicensed manufacturers could be required to close shop immediately, as their inventories could be confiscated by KRA. Among the regions that could be worst hit by the new directive could be the Narok, Kisii, Kericho and Bomet Counties whose soda supply could be interrupted as their supplier Kisii Bottlers is also flagged as among the non-compliant firms. Almasi Beverages is the holding company for Kisii Bottlers, Mt Kenya Bottlers and Rift Valley Bottlers. The last two are however listed as being complaint. Spectre International based in Kisumu manufactures and markets spirits - the base for production of alcoholic beverages.

The firm describes itself as the manufacturer of quality Extra Neutral Spirit, Neutral Spirits, Industrial Methylated Spirits and Coloured Methylated Spirits produced from sugar cane molasses to be used in the beverage, pharmaceutical and personal care industries.

Inquiries to the Spectre were unsuccessful while Raila’s spokesman Dennis Onyango said we speak to KRA. Keroche Chief Executive Tabitha Karanja condemned KRA’s closure notice, claiming that a suit challenging the tax claim had been filed in court and was yet to be determined. “It is very clear to us that the sole purpose of KRA’s public notice is to confuse the market and force the closure of Keroche Breweries and ultimately, put it out of business,” Mrs Karanja said in a statement.

KRA issued the notice in a brazen contravention and contempt of a court order dated July 22, 2015, and which they have in their possession. Then order stopped them from executing their demands and allowed Keroche Breweries to continue conducting its business, until the hearing of the case set for September 22, she added.

“KRA, therefore, has no authority to de-list Keroche Breweries from the list of licensed excise manufacturers in 2015 until the full hearing and determination of that case.”

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