Keroche, KRA enter agreement on tax payment plan

Thursday, March 17th, 2022 01:26 | By

Keroche Breweries Limited finally reopened after it entered into a tax payment plan with the Kenya Revenue Authority (KRA) following a week-long negotiation over arrears that left the brewer shut for over a month.

The new payment plan will see Keroche settle an undisputed tax amount of Sh957 million over a period of 24 months starting from January 2022.

The brewer has already remitted the first installment as per the agreement after the taxman gave a directive lifting an agency notice issued to 36 banks against Keroche.

“Kenya Revenue Authority and Keroche Breweries Limited  have agreed on a payment plan on taxes owing, and not in dispute from Keroche,” KRA said in a notice yesterday.

Dispute Resolution

The tax collector further said any tax dispute will be dealt with in accordance with the laid down statutes and procedures which flows from an earlier Alternative Dispute Resolution (ADR) deal already agreed between the two parties.

“As a law-abiding entity, the company gives a renewed commitment to ensure that they meet their statutory obligations as they fall due. This will ensure that we make our fair contribution to the exchequer for building our Kenyan economy,” Keroche CEO Tabitha Karanja said in response to the notice.

KRA and Keroche have been in a 16-year long tax dispute resonating around the classification of the brewer’s products, leading to two agreements between the two parties, in July and December 2021. By the second agreement of December 21, 2021, a tax of Sh7.54 billion was agreed to be owing and payable. The brewer, however, stated earlier it only owes KRA Sh322 million in arrears plus Sh500 million it had defaulted paying in 24 monthly installments. 

Now as the two enter into yet another agreement, the issue of product reclassification, which has been the bone of contention, remains unresolved.

The taxman had reclassified the brewer’s Vienna drink to a higher 60 per cent excise rate and went ahead to demand the rebates, which according to Keroche, bloated the tax arrears.

The firm has appealed to the national government to consider reviewing some of the existing laws and enacting new ones to give incentives and facilitate local businesses, especially in times of economic hardships.

The finances of Keroche, a private company, are not publicly available but it is expected to struggle to raise the billions of shillings if the KRA has its way and the parties fail to reach a permanent solution to the decade-long disputes. 

More on Business