Keroche CEO wants Sh14 billion case handled by tax tribunal

'Deploying methods that appear to intimidate a party in a mediation process undermines an established practice'

In Summary

• Keroche CEO and her husband have been charged with giving incorrect statements, reducing their payable tax by billions. 

• CEO and husband dispute amount indicated in charge, both out on bail. 

Keroche CEO Tabitha Karanja when she was arrested on August 22
TAX EVASION CHARGES: Keroche CEO Tabitha Karanja when she was arrested on August 22

Keroche Breweries CEO Tabitha Karanja has taken issue with her prosecution saying there is a legislative process to determine disputes related to tax demands.

Tabitha was arraigned on Friday alongside her husband Joseph Karanja, 71. The two directors of Keroche Breweries denied up to 10 charges totalling to Sh14 billion of tax evasion.

According to the charge sheet, the duo on diverse dates between February 20, 2015, and January 20, 2016, unlawfully made incorrect statements in their excise duty returns by reducing their duty by Sh1.8 billion. 

They also made incorrect statements for the January to December 2017 which affected their payable excise duty by Sh3.6 billion.

It is also alleged that between February 20 and July 20 this year, they unlawfully omitted from their VAT returns for January to June affecting their VAT liability by Sh196 million.

Through Lawyer James Orengo and Kioko Kilukumi, the duo said the amount contained in the charge sheet is disputed. 

Orengo told Milimani chief magistrate Francis Andayi that there is a specific procedure governing tax issues. He questioned why the prosecution has not arraigned the KRA staff who are alleged to have aided in the offence.

The lawyer cited a letter dated August 16 addressed to KRA commissioner confirming there is a tax dispute pending before the tribunal.

Tabitha in the letter claims their largest obstacle to growth "has and will always be unfair competition". She says it has been manifested through unfair trade practices that they have severally complained about to the authorities including the Commission of Monopolies.

“As we await the outcome of the Tax Tribunal (TAT), deploying methods that appear to intimidate a party in a mediation process, prejudices and undermines an established practice that has guided all stakeholders through the years,” the letter read. 

Tabitha further explains that currently, Keroche manages 1.1 million hectoliters, state of the art brewing facility valued at Sh8.5 billion and employs 350 people. Their current tax remittance totals approximately Sh2 billion annually.

“With full capacity, the company will be able to remit taxes in excess of Sh10 billion annually and create employment to more than 1,000 Kenyans directly and tens of thousands indirectly,” it reads further. 

Orengo in the bail application quoted the Bible; Matthew 19:6 which reads, “What God has put together let no man put asunder.”  The lawyer said sin was committed when Karanja was separated from his wife on Thursday during their arrest.

He urged the court to consider that the accused persons are one entity when it arrives its decision to grant bail. Andayi was further requested to consider Karanja’s medical condition and him being a senior citizen.

In a swift rejoinder, the prosecution led by Alexander Mueti and Catherine Mwaniki said the accused persons have been aware that KRA required clarification on the matter of tax.

“They were summoned to appear before KRA on the same subject but they chose not to do what is required of them in the law,” he said

Muteti also quoted the Bible saying ‘give to Caesar what belongs to Caesar'.

“Offences of such nature are treated just like anti-corruption and economic crimes. Please do not lose focus," he said.

Karanja was released on Sh1 million bond and Sh5 million bail. He was given seven days to post bail. The company was granted Sh15 million bail.

Tabitha was granted Sh10 million bail or Sh15 million bond. By 2:15 pm on Friday, they had posted bail and left in a convoy of high-end vehicles.

The matter will be mentioned on September 2 with the pre-trial set for September 24.

The case will be heard by Magistrate Martha Mutuku. 

Edited by R.Wamochie 

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