Companies

KRA and Keroche agree on tax payment plan after week-long negotiations

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Keroche Breweries chief executive Tabitha Karanja addresses the media on March 9, 2022. PHOTO | DIANA NGILA | NMG

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Summary

  • Kenya Revenue Authority (KRA) and Keroche Breweries have agreed on a tax payment plan after week-long negotiations following an appeal from the Naivasha-based brewer for a new lease of life. 
  • KRA announced in a statement released Wednesday that the brewer will now have 24 months to clear tax arrears amounting to Sh957 million which are undisputed. 

Kenya Revenue Authority (KRA) and Keroche Breweries have agreed on a tax payment plan after week-long negotiations following an appeal from the Naivasha-based brewer for a new lease of life. 

KRA announced in a statement released Wednesday 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 on March 14, 2022 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. 

As part of the agreement, KRA will also lift the agency notices with the 36 banks. Agency Notices are commonly issued by KRA to banks holding deposits on behalf of a tax payer and result in the bank freezing such funds.

The taxman said that the rest of the taxes owed by the brewer will be dealt with as agreed by the parties in Alternative Dispute Resolution Agreements signed in 2021. 

This new development comes as a relief to the company which last week appealed to KRA  to grant it a grace period of 18 months to clear taxes in arrears while paying the current taxes as they fall due.

The brewer lamented that the plant closure had further crippled the business that was already in financial distress, risking over 2 million litres of beer worth about Sh512 million in their storage which has a fixed maintenance cost of Sh30 million per month.   

Wednesday's truce failed to reveal how the Authority will collect the rest of tax arrears. 

In a separate statement, Keroche chief executive Tabitha Karanja said the firm will reopen with a commitment to pay their dues. 

"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," Ms Karanja said in a statement.

Last week KRA disclosed that the troubled Naivasha-based Keroche Breweries owes it Sh22.79 billion in unpaid taxes. The taxman has painted the brewer as a cheat who owes the State and has been avoiding meeting its obligations. 

The finances of Keroche, a private company, are not publicly available but it is expected to struggle to raise the billions of shillings if the KRA has its way and the parties fail to reach a permanent solution to the decade-long disputes. 

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