Keroche fights back accuses KRA of stifling local firms at expense of foreign

Keroche Breweries has accused the Kenya Revenue Authority of stifling local industries at the expense of foreign ones.

Keroche CEO Tabitha Karanja on Thursday told the media that the decision to demand Sh9 billion has crippled their operations.

"Today in the morning, we woke up to an agency notice issued by KRA directed to our banks to collect Sh9 billion. This means Keroche Breweries cannot withdraw any more money or transact any business from their accounts until KRA collects the alleged Sh 9 billion. In short, as we speak, they have halted all the operations," she said.

She continued: "As a law-abiding company, we expected that KRA would abide by the process in which we had 30 days by law to appeal the tax appeals tribunal decision. We are shocked that KRA has no intention of respecting the legal process."

The Tax Appeals Tribunal in its ruling on March 9, held that Keroche Breweries Limited was involved in the compounding of spirit which amounts to manufacture within the meaning in Excise Duty Act, 2015 and Customs and Excise Act, CAP 472 (repealed) as such Vienna Ice was a distinct product for which Excise Duty was payable.

The brewer had filed six appeals before the Tax Appeals Tribunal in 2015 and 2017.

In three of the appeals, KRA and Keroche disagreed on the manufacturing process of Vienna Ice Brand of Vodka.

The brewer argued that the Vienna Ice brand of Vodka was not a distinct product from Crescent Vodka since Vienna Vodka was produced by diluting Crescent Vodka which process did not amount to manufacture.

KRA, on the other hand, argued that the process undertaken by Keroche Breweries was compounding within the Compounding of Denatured Spirits Act Cap 123.

Compounding of spirits also amounted to the manufacture of a new product within the definition of the Customs & Excise Act, CAP 472 (now repealed).

KRA's Commissioner for Legal Services and  Board Coordination Paul Matuku said in a statement on Wednesday that the authority and the breweries had a contention with regard to classification of pineapple based wines. 

On Thursday, Karanja said it was wrong for KRA to mislead the public yet the company still has 30 days to appeal.

"The tax appeals tribunal decision is not the final verdict. It is important that the public understands how this process works. If you have any dispute with KRA, the first step is to take the matter to the tax appeals tribunal. Only when this fails is one allowed to go to court," she said.

Already, a Danish Brewing Company E.A Limited, a subsidiary of Bounty Global Management DWC LLC has announced that it will set to be the first anchor tenant at the Naivasha Industrial Park.

The beer maker has set aside $45 million (Sh4.59 billion) to set up its operations in the country.

Karanja said the beer maker will come "with over 60 per cent of workers from a foreign country."

"Keroche has 99 per cent of locals. We need an enabling environment," she said adding that local companies must be supported.

Karanja said she will continue fighting as she will not keep up.

"This injustice cannot be allowed to stand. Our lawyers are currently in court to stay this order," she said.

She said her company benefits over 300 locals directly and thousands along the value chain.

In August last year, the Director of Public Prosecutions Noordin Haji ordered the arrest of Keroche Breweries Limited proprietors Tabitha Karanja and Joseph Karanja over allegations of Sh14 billion tax fraud.

Ordering the arrest, Haji said Kenya Revenue Authority Commissioner-General Githii Mburu submitted an inquiry file to his office on August 18 and an audit which established that Keroche had evaded tax totalling Sh14,451,836,375.

Karanja said in six months, KRA has made unexplainable and unrealistic demands amounting to Sh 23 billion.

"Why are they destroying the manufacturing agenda that we claim is one of our economic pillars? Does this country only favour foreign investors?"

Karanja said President Uhuru Kenyatta has repeated that local and multinationals have equal rights.