The Kenya Revenue Authority (KRA) has refuted claims by Keroche Breweries that the taxman had crippled the company in the guise of collecting taxes.
Keroche Breweries CEO Tabitha Karanja on Friday accused KRA of frustrating local entrepreneurs. She disclosed that KRA had shut down its plant in Naivasha over Ksh322 million tax arrears, threatening the livelihood of more than 250 direct employees.
But in a statement on Tuesday, KRA denied the claims accusing the businesswoman of unfair competition and dishonesty.
Contrary to Karanja’s claims that the taxman had frustrated negotiation talks with the Keroche leadership, KRA said the company is unwilling to repay the owed millions despite several commitments.
The Nakuru senatorial aspirant had, in a press statement on Friday, said the brewer had been affected by the effects of the Covid-19 pandemic that hit businesses hard.
She said her business efforts to strike a fresh deal with the taxman on the payment of the tax arrears had proved futile.
The CEO said the company had tried in vain to have an audience with KRA Commissioner General James Githii Mburu over the matter.
In her Statement, Karanja revealed that KRA had instructed banks not to issue loans to Keroche, hence frustrating efforts to run the company. She urged President Uhuru Kenyatta to intervene and end the standoff to avoid further losses.
However, in a detailed statement, KRA said the company is to blame for the current row, arguing that the firm has not been remitting withheld taxes to government as required by law.
KRA indicated that the taxpayer may be using taxes collected to fund the company’s operations or for other private purposes.
According to KRA, the Ksh351 million in question is the principal tax that Keroche withheld for the period January 2021 to date and has not remitted the same to KRA.
“This means that Keroche Breweries Ltd has been collecting Excise Duty Tax and VAT from its consumers through the sale of its products but has not been remitting the taxes to KRA,” KRA said.
KRA added, “By 14th December, 2021, this amount was standing at 279,958,530 when by a letter dated the 14th December, 2021 Keroche offered to pay the debt by instalments of Kshs. 20,000,000.00 from January 2022 to October 2022 and thereafter Kshs. 30,000,000 for the Month of November, 2022 and Kshs. 49,958,530 for the month of December, 2022. Keroche only paid Kshs. 1o,000,000 and dishonoured the agreement.”
KRA said collection of Excise Duty is through Excise Stamps issued to manufacturers depending on their volumes of production.
“The KRA does not issue excise stamps to manufacturers who have not accounted for the stamps previously issued through payment of taxes collected or until outstanding undisputed taxes are paid in full or an agreed payment plan is entered into and the same consistently honoured,” KRA said while explaining why the brewer was shut down.
“Keroche Breweries Ltd has been accorded the opportunity to comply with the tax laws. The Taxpayer has been collecting taxes from consumers but not remitting same to KRA. The Taxpayer has not demonstrated any commitment to comply but has consistently failed to remit current taxes and also failed to honour the agreed payment plans.”
The taxman insisted that Keroche must pay all pending taxes, noting that doing otherwise would amount to unfair business practices.
“By allowing any Taxpayer to continue collecting taxes and not remitting the same, KRA will not be executing her mandate of ensuring that taxes that fall due are remitted in a timely manner and that all taxpayers remit their fair share of taxes ‘Not a shilling more and Not a shilling less’.
“To allow a manufacturer to sell their products without levying correct taxes or to collect taxes without remitting will amount to granting those evading taxes undue advantage over the many law-abiding taxpayers who diligently pay their taxes. It is to introduce distortions in the market that will end up killing tax-paying businesses at the expense of those that do Not remit taxes. In the end, No taxes will be paid and employment will be lost when the tax paying businesses close down due to unfair competition from those not paying taxes.”
The CEO and her husband Joseph Karanja have for years been embroiled in a tax dispute with KRA.
The Keroche Breweries founders were arrested in August 2019 over Ksh14 billion tax evasion claims before they were later freed on bail amid concerns from members of the public.
The company was accused of evading payment of Ksh12.34 billion VAT for stamps (Ksh329.4 million), Crescent Vodka (Ksh135.4 million) among other products.