Economy

KRA signals peace with Keroche in Sh22bn row

MBURU-KRA

KRA Commissioner General Githii Mburu. FILE PHOTO | NMG

The Kenya Revenue Authority (KRA) has signalled concessions for Keroche Breweries after day-long negotiations with the owners of the embattled firm on Thursday over a disputed Sh22.79 billion tax bill.

The taxman revealed that a deal was being hammered by Thursday evening to provide “an amicable road map” for settling the dispute.

“We have had day-long discussions and we have made good progress,” KRA Commissioner-General Githii Mburu told the Business Daily on the phone last evening.

Mr Mburu said further talks are expected to yield a deal, paving the way for Keroche to pay tax arrears under the negotiated agreement in exchange for the opening of the brewer’s factory.

"We will put this into an implementable agreement and I have a firm conviction that we will have an amicable solution. The teams have agreed to go and look at the documents [on a new deal] before we can make it public," Mr Mburu said without divulging additional details.

He remained tight-lipped on the concessions made by the two parties following the talks.

Keroche chief executive and co-founder Tabitha Karanja had earlier confirmed the KRA meeting.

"Yes, they [KRA] have invited us," she told the Business Daily on Thursday morning.

The meeting was expected to chart the way forward amid the raging tax dispute, she added.

2m litres

Keroche has requested the KRA to grant it a grace period of 18 months to clear taxes in arrears while paying the current ones as they fall due.

It has also appealed to the KRA to allow the reopening of its plant in Naivasha to prevent huge losses and lift the agency notices with the 36 banks, which demanded the lenders wire cash from the Keroche accounts to the taxman’s bankers.

Keroche said it had over two million litres of beer worth about Sh512 million in its storage with a fixed maintenance cost of Sh30 million per month.

"If nothing is done in the next seven days, we will be forced to drain down all the beer and lay down over 250 direct employees and thousands within our nationwide distribution network," the company had said.

Excise duty

The brewer earlier on Wednesday said it was unable to honour an earlier payment plan due to frequent disruptions from the taxman.

The statement was in response to the KRA’s blow-by-blow account of the 16-year-long battle with Keroche, including details of unpaid corporate tax, excise duty, VAT and penalties of Sh3.02 billion.

The KRA accuses Keroche of defaulting on agreed plans to clear the tax arrears, including a deal to pay half a billion shillings monthly from December to clear part of tax arrears amounting to Sh4.49 billion.

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 revenue authority has its way, placing the brewer’s assets and those of its shareholders at risk.

25 years

The taxman also imposed a freeze barring 36 banks from dealing with the 25-year-old family-owned brewer famous for its Summit Lager and Summit Malt beers.

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