KRA chokes Keroche over Sh9b tax bill

Keroche Industries CEO Tabitha Mukami Karanja and the company’s chairman of the board Joseph Muigai Karanja at Milimani law courts where they were charged for tax evasion amounting to Sh15 billion. Karanja was released on a cash bail of Sh2 million while Tabitha was released on a cash bail of Sh10 million. [Collins Kweyu, Standard]

The Kenya Revenue Authority (KRA) has moved in to recover Sh9 billion from Keroche Breweries, a day after the Tax Appeals Tribunal ruled against the Naivasha-based brewery.

In a letter seen by The Standard, KRA has appointed Equity Bank as its agency, a situation that compels the lender to pay the entire tax bill.

“Today (yesterday) morning, we woke up to an agency notice by KRA directed to our banks to collect Sh9 billion. This means Keroche Breweries cannot withdraw any money or transact any business from their accounts until KRA collects the alleged Sh9 billion. In short, as we speak, KRA has halted all our operations,” said Tabitha Karanja (pictured), the founder and CEO of Keroche.

The agency notice was written by KRA’s Deputy Commissioner in charge of Domestic Tax Daniel Kagira and was addressed to both Equity’s legal department and Ms Karanja.

A source at KRA, however, noted that issuing agency notice against a taxpayer immediately after winning the case was a “standard procedure.”  

In the notice, KRA asks Equity to pay all the tax bills owed by Keroche, failed to which the lender would be held responsible.

“Please note that in case of partial payment, this notice shall remain in force until the amount specified herein is fully recovered. Sub-section 42 (of Tax the Tax Procedures Act, 2015), provides that, if without reasonable cause you fail to comply with this notice, you shall be personally liable for the amount specified,” reads part of the notice agency letter.

Following the ruling, the taxman is demanding from Keroche Sh4.7 billion in excise taxes, Sh3.5 million in withholding taxes, value-added tax of around Sh3.8 billion and corporation tax of Sh639.3 million.

Keroche has already said that it will move to the High Court to appeal the decision.

She accused KRA of jumping the gun to declare victory, when the arbitration that could end the stalemate is not yet complete.

She took issue with KRA’s framing of its public announcement titled “KRA wins case to collect over Sh9 billion from Keroche Breweries.”

Keroche lost case in which the brewer and KRA locked horns on the manufacturing process of the latter’s Vienna Ice Brand of Vodka. The brewer has insisted that one of its alcoholic drinks had been diluted with water and as such not all the content should attract taxes.