A tax dispute between the Kenya Revenue Authority and Tabitha Karanja's family owned business, Keroche breweries, took a nasty turn in recent years.
During the tenure of Githii Mburu as KRA's commissioner general, Keroche breweries was the biggest highlight of the taxman's clampdown on businesses over tax arrears.
Karanja, now the Nakuru senator and Mburu were embroiled in a protracted court case after the KRA pressed tax evasion charges against her in 2020.
KRA closed down the brewer nearly 10 times in 2022 alone as the taxman moved to press Keroche to settle 14.5 billion owed in tax arrears.
The tax dispute dates back to August 2019 when KRA claimed that the brewery had evaded billions in taxes.
This led to the arrest of the brewery’s directors in the full view of cameras.
In 2020, Karanja was arrested by DCI detectives at the breweries' premises in Naivasha.
KRA officials and DCI detectives had camped at the premises following her arrest order by DPP Noordin Haji.
Karanja was arrested alongside her husband Joseph Karanja over the Sh14 billion tax evasion claims.
Karanja claimed that the company was not been involved in tax evasion and the firm was being subjected to "humiliation and intimidation."
In March 2022, the factory and the tax agency, brokered a deal temporarily settling disputes that had been going on in the previous years.
The agency agreed to have the factory resume its operations after they agreed that Keroche was going to settle its close Sh957 billion tax liability in two years.
In June 2022, the Authority shut down the company six times, for defaulting on an earlier agreed plan to repay tax arrears totaling Sh300 million.
But Keroche later disowned the agreement saying it was signed under duress.
“When we signed the agreement, we were under duress…We were actually forced to sign the document after sitting in a government office for close to six hours without tea or even a glass of water,” Karanja said then.
“The pressure in the room was palpable. You could hear a pin drop. The commissioners present told us in black and white they were under pressure but could not disclose by who.”
The agreement was that Keroche would pay Sh30 million within a month after resuming work.
On July 29, KRA opened Keroche following a court order issued on July 14, after having shut it down for the sixth time in June 2022.
In September, the taxman accused the brewery of failing to make the required payment, agreed upon prior to reopening in July.
According to the KRA, Keroche was to pay Sh8 million on August 6, Sh8 million on August 30 and taxes worth Sh14.2 million, which were yet to be paid by the time.
"Keroche Breweries Limited has been adamant in disregarding the court order of July 14," KRA's application to the court read.
KRA further said despite issuing letters demanding the payment of the taxes from Keroche on July 21, August 3, August 15, and August 24, the brewer had failed to comply with the order and pay any taxes as ordered or when they fall due.
"Keroche Breweries Limited has now proceeded to decline to comply with their obligations under tax law and due dates to accounting for tax being the end of the month,'' KRA said in a court petition.
Following the petition, Keroche was summoned to physically appear in court on October 27, 2022.
On February 7, the court ordered the DPP to supply copies of witness documents in the Sh 14.5 billion tax evasion case against Keroche.
Karanja has since denied ten counts leveled against her by the State.
The case will be mentioned on March 13, for purpose of confirming whether the prosecution has supplied all documents to the defence.
Karanja has highlighted that the tax dispute has prevented the brewery from getting any funding from any bank in Kenya and internationally and that it is a hindrance to its operations.
The CEO also expressed hope that the dispute will be resolved through the Alternative Dispute Resolution process, as proposed by the KRA Chairman.
