Keroche Breweries chief executive officer Tabitha Karanja says she signed the latest tax deal with the taxman, which she has since dishonoured, under duress in the latest intrigue in the long-running dispute with the Kenya Revenue Authority (KRA).
The troubled Naivasha-based-brewer also appeared to be walking out of the monthly repayment deal signed three months ago saying the instalments were too high, and that it was not tenable to “pay such a huge amount of money a few weeks after the company was reopened for operations”.
“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,” Ms Karanja said in her office on Thursday, as she reacted to the taxman’s latest stance that he will not reopen the plant until Keroche honours its end of the bargain.
“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,” she added.
She said before KRA opened the factory, she had to pay Sh21 million.
“The account had only Sh15 million and we borrowed an additional six,” she divulged.
“The agreement was that we pay Sh30 million within a month after resuming work but we realised that it was practically impossible. Later we received a letter from KRA warning us of consequences for failing to meet our financial obligation,” she said.
The escalation of the dispute now dims an appeal from the firm for a six-month moratorium before beginning to make monthly repayments as per the agreement signed three months ago.
Mrs Karanja, who is balancing between politics and running the company, accused the KRA of “exaggerating” the figures, insisting the Naivasha-based firm’s outstanding arrears was only Sh975 million.
KRA in a breakdown last month put the total disputed claims on the company at Sh22.79 billion.
“Surprisingly, I am reading the figures in the newspapers. Officially, they have never written to the company demanding such an amount,” said Mrs Karanja.
The taxman has vowed not to reopen Keroche Breweries, accusing the brewer of disregarding a deal to stagger payment of the tax bill.
“I also want to dispel the narrative that has been created by the KRA that Keroche Breweries Ltd is a non-compliant taxpayer who perpetually defaults on their tax obligations,” she defended the company.
“The truth of the matter is that there have been tax disputes dating back to 2002 and the company exercising its constitutional right to fair taxation should not be blacklisted,” she added.
She said that the company in 2021 opted for an out-of-court settlement of cases through the Alternative Dispute Resolution (ADR) and on a without prejudice basis managed to settle two historical cases.
The tax dispute arose following an audit of records by the Commissioner for Domestic Taxes between 2002 and 2015.
She said the ADR deal was entered between the Commissioner and the brewer.
“The July 23, 2021 agreement indicated that the principal sum was Sh134,447, 847 was to be paid in nine instalments, beginning from September 25, 2021, to May 25, 2022,” the agreement indicated.
The two parties agreed to reconcile a figure of Sh 322,000,000 admitted by the taxpayer and Sh351,647,446 as updated by the Commissioner before the first instalment paid on April 29, 2022, with the difference staggered in 12 months.
The undisputed amount of Sh322,000,000, Sh134,447, 847 and Sh500,000,000 was to be paid between dates March 15, 2022, to January 31, 2023.
“It is worth noting that Keroche Breweries earned monthly revenues of between Sh400 million and 500 million pre-Covid-19. After the prolonged closure, the revenues dropped to below Sh 50 million,” she said.
