KRA seeks to close Keroche Breweries over unpaid tax

Kenya Revenue Authority (KRA) has refused to renew Keroche Breweries’ excise tax licence for the new financial year in a move that has threatened to stall the alcohol manufacturer’s operations.

KRA, in a letter sent to Keroche last week, says the alcohol manufacturer has been stating incorrect excise duty rates while filing its returns, and owes the taxman huge sums of money. The taxman, however, did not indicate how much.

KRA says Keroche did not attach copies of its tax compliance certificate and those of its directors while applying for renewal of its licence in January. It has now ordered the brewer to cease production of any taxable goods, and to return unused excise stamps it was issued with.

                         Keroche Breweries founder Tabitha Karanja. It’s been all battle with KRA and government.

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But Keroche moved to court yesterday to compel the taxman to reverse its decision, arguing that KRA was yet to issue it with tax compliance certificates at the time it applied for renewal of the licence.  The brewer adds that its directors are separate legal entities hence asking for their tax compliance certificates is illegal.

“Reference is made to our letter to you dated February 4 indicating that you failed to submit copies of valid tax compliance certificates for the company and its directors. In addition, your company has failed to declare correct excise duty rates, resulting in huge tax arrears,” reads the KRA letter. “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.”

KRA has also cited the Kenya Bureau of Standards (Kebs) cancellation of Keroche’s licence to produce its Crescent gin, brandy and whisky brands. The cancellation has since been revoked by High Court judge George Odunga following a series of suits from various manufacturers, including Keroche.

The brewer now says the taxman can recover undeclared revenue, and that denying it a licence could cripple its operations despite the millions of shillings it pays in taxes every year. Keroche Managing Director Kabutha Nduati adds that the firm had a legitimate expectation that its licence would be renewed after KRA failed to determine its application long after the 30 days stated in law.

It’s absurd for KRA to require Keroche to submit documents and information which is issued by it,” the brewer says.

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