The Kenya Revenue Authority (KRA) and Keroche Breweries have agreed on a tax payment plan after a week of negotiations.
Through a statement, KRA announced that the brewer will now have 24 months to clear tax arrears amounting to Sh957 million which are undisputed.
The authority said the two sides signed an agreement early this month that will require Keroche to honour payments starting January 2022.
“The addendum agreement which sets the stage for the reopening for production of the Naivasha based brewery will see Keroche settle an undisputed tax amount of Sh957,000,000 over a period of twenty-four (24) months starting from January 2022,” KRA said in a statement.
The brewer has already remitted the first instalment as per the agreement after the taxman gave a directive lifting an agency notice issued to 36 banks against Keroche.
“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.
In July 2021, Keroche agreed that it owed a total of Sh272,211,842 comprising Sh134,447,847 in principal taxes and Sh137,763, 995 in interest and penalties.
“The brewer offered to pay the principal taxes of Sh134,447,847 in nine monthly instalments starting from September 25, 2021, a payment plan KRA says was not honoured,” stated the taxman.
In another plan, the brewer proposed to pay Sh500 million in 24 equal instalments starting December 2021 but failed to comply, according to the taxman.
“In the two agreements, Keroche Breweries was to apply for remission of penalties and interests upon full settlement of the outstanding principal tax liability. Keroche Breweries Ltd has not honoured the payment of instalments as per the agreements,” KRA said.
KRA said to allow a manufacturer to sell their products without levying correct taxes or to collect taxes without remitting amounts to granting those evading taxes undue advantage over the many law-abiding taxpayers who diligently pay their taxes.
Keroche’s boss had asked the taxman for a grace period to clear the tax obligation, saying the Covid-19 pandemic had adversely affected its revenue flows.
The Naivasha-based breweries said the taxman closed the firm and warned 36 banks against giving it loans due to Sh322 million tax arrears tussle putting the firm in a tight corner as it struggles to replenish its coffers that went dry as the Covid-19 pandemic struck.
Keroche had earlier petitioned President Uhuru Kenyatta to intervene in the re-opening of the company and be given a grace period of 12 months to settle the arrears.
“Keroche is capable of remitting over Sh21 billion every year in tax and a positive consideration of this appeal will be a win for the company and KRA,” Karanja said.
Further, the Kenya Association of Manufacturers (KAM) called on Keroche Breweries to activate their membership to allow them to assist in their ongoing tax case.
Through a statement, KAM CEO Phyllis Wakiaga said they would engage the KRA on the issue with a view to seeking a mutually agreeable solution to the impasse that saves jobs and ensures all due taxes are settled.
“From the meeting, it was agreed that Keroche Breweries will activate their membership and submit the details and documentation of the issues raised, to enable KAM to engage KRA on the same,” it said in a statement.
Kenya Private Sector Alliance (Kepsa) also admitted in a tweet that it was “engaging KRA on this matter” and “acknowledges and appreciates the contribution of Keroche to the Kenyan economy.”