Keroche changes tack to survive Sh322m tax row

Tuesday, March 8th, 2022 06:10 | By
Keroche banking on CAK to resolve beer bottle wars.

Keroche Breweries has changed its fight-back strategy by involving lobby groups to help it survive the Sh322 million tax arrears tussle with Kenya Revenue Authority (KRA) which has already moved to clip its wings.

The Naivasha-based breweries said the taxman closed the firm and warned 36 banks against giving it loans, putting the firm in a tight corner as it struggles to replenish its coffers that went dry as the Covid-19 pandemic struck.

Keroche Breweries CEO Tabitha Karanja yesterday submitted her concerns to the Kenya Association of Manufacturers (KAM) regarding the tax tussle that is putting it on the verge of joining the long list of companies that have shut in the country.

The business association that unites industrialists and offers a common voice for businesses acknowledged receipt of Keroche Breweries' concerns.

Agreeable solution

“From the meeting, it was agreed that Keroche Breweries will activate their membership and submit the details and documentation of the issues raised, to enable KAM to engage Kenya Revenue Authority (KRA) on the same,” it said in a statement.

This, KAM added, will be done with a view of seeking a mutually agreeable solution to the impasse that saves jobs and ensures all due taxes are settled.

Kenya Private Sector Alliance (Kepsa) also admitted in a tweet that it was “engaging KRA on this matter” and “acknowledges and appreciates the contribution of Keroche to the Kenyan economy.”

Keroche had earlier petitioned President Uhuru Kenyatta to intervene in the re-opening of the company and be given a grace period of 12 months to settle the arrears.

“Keroche is capable of remitting over Sh21 billion every year in tax and a positive consideration of this appeal will be a win for the company and KRA,” Karanja said.

The taxman wants Keroche to settle outstanding tax arrears of Sh322 million that accrued from February 2021 amid low business operations caused by the pandemic, leaving the firm constrained to meet its financial obligations like taxes and salary payments.

About 250 workers are also staring at possible job loss.

“On 7th December 2021 KRA closed the factory and further issued agency notices to 36 banks in Kenya. This completely collapsed all our business operations since we could neither produce, sell or access any financing from any of the banks to assist in settling the arrears,” the company stated.

It said this has drained all its resources and unfortunately if nothing is done in the next seven days, it will be forced to drain down all the beer and lay down over 250 direct employees and thousands within its nationwide distribution network.

The move has left the company on the brink of losing two million litres of liquor worth over Sh500 million as resources for maintenance gradually diminishes and banks shut doors for the bailout.

“We started negotiating for a payment plan and we requested for 24 monthly instalments based on our financial projections which KRA rejected and insisted on six monthly instalments,” the firm stated.

Production line

Between December 7, 2021, and January 31, the firm’s production line was on and off, selling for only three days in some instances as KRA struck at intervals demanding its dues.

Karanja has further requested for the formulation of laws that extensively protect and cushion local enterprises such as giving waivers, especially during economic hardships.

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