KRA orders closure of Keroche Breweries

Keroche Breweries is staring at closure after the taxman denied it an operating licence. The licence was formally withdrawn yesterday when the Kenya Revenue Authority (KRA) published in the local dailies a list of tax-compliant alcohol makers and other excise manufacturers for the year 2015.

“...it is an offence under Section 185(1) (d) (iii) of the Customs and Excise Act to be in possession, purchase or consume excisable goods manufactured or imported or sold by unlicensed persons. Any manufacturers or importers not listed ... are not authorised to manufacture, import or sell excisable goods,” KRA said.

However, Keroche Chief Executive Officer Tabitha Karanja (pictured) termed KRA’s notice illegal.

“We believe this notice was published by KRA prior to receiving a court order issued this Wednesday, July 22, 2015 suspending the contents of the letter sent by KRA to Keroche Breweries on July 14, 2015,” she said.

 The termination of the brewing licence would have sweeping implications for the Naivasha-based brewer, which only two months ago, increased its production capacity tenfold through a Sh5 billion bank loan. Mrs Karanja has protested the closure saying it is devastating to the operations of the brewer citing that there was more than Sh1-billion worth of alcohol in the production pipeline that could go to waste.

“Currently, beer worth Sh1 billion is in the process of brewing, namely some in the brew house, some held in fermentation tanks, infiltration process, packaging line, while others are in the store ready for dispatch,” Mrs Karanja said in a protest letter addressed to Industrialisation Cabinet Secretary Adan Mohamed.

The letter in part accuses KRA of waging a war against her company. “All this cannot be reversed due to the product’s limited shelf life being a naturally brewed beer. In short, this process is unstoppable as the loss would be colossal not only to Keroche, but to the country in way of revenue and economic growth.”

 She adds that Keroche has been paying the fair share of taxes, estimated to be in the billions, and had continued to comply with local laws.

The plant closure follows instructions issued by Pancrasius Nyaga for the commissioner for domestic taxes, who wrote about the taxation dispute.

 “You are forthwith required to cease manufacture of excisable goods, pay excise for all goods manufactured by you, return all unused excise stamps issued to you by KRA,” Mr Nyaga wrote nearly two weeks ago.

Keroche, KRA claimed, had been involved in under-declaration of the applicable excise duty on its potable spirit brands produced at its plant. The taxation dispute had supposedly resulted in accrual of huge tax arrears and that the revenue agency had no option than close the operations.

KRA also claimed that Keroche had failed to submit copies of valid tax compliance certificates for the company and its directors. But Mrs Karanja says it was actually KRA that issues compliance certificates and that it would be absurd to request the same from the brewer.