KRA and Keroche tax payment agreement: The Kenya Revenue Authority and troubled local brewery Keroche Breweries have reached an agreement over a multi-billion tax dispute. The dispute had led KRA to shut down Keroche Breweries two weeks ago.
According to the new agreement, Keroche will now have 24 months to clear tax arrears that are currently amounting to Sh. 957 million. These are the arrears for which there is no dispute.
In addition, the taxman has announced that KRA and Keroche had signed an agreement on March 14, 2022 that will require Keroche to honour payments starting from 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 Sh. 957,000,000 over a period of twenty-four (24) months starting from January 2022,” KRA said in a statement.
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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. These agency notices had crippled Keroche’s ability to run its operations.
The KRA further said that the rest of the taxes owed by the brewer will be dealt with as agreed by the parties in the Alternative Dispute Resolution Agreements signed in 2021. The taxman shut down the brewer over Sh. 332 million tax arrears in early March 2022. The shut down was expected to result in hundreds of workers losing their jobs at the factory.
Keroche was first shut down by the KRA in December 2021. However, it was reopened during the festive season after the management entered into an agreement with the taxman.
In January this year, Keroche Breweries was grasping on straws as its financial crisis deepened. The local brewer had salary arrears running into over two months and had also defaulted on a tax repayment plan with the Kenya Revenue Authority.
Following the shut down, Keroche’s chief Executive Officer Tabitha Karanja has pleaded with President Uhuru Kenyatta to intervene and salvage the company from total collapse, saying efforts to get an audience with the KRA commissioner General had hit a snag. “We are sure that this issue can be sorted amicably as we are ready to pay the required taxes if KRA opens up our brewery,” she said.
Ms. Karanja said that the pandemic had taken a heavy toll on her business leading to the current problems. “To be candid, the ripple effect of the disease greatly affected our tax obligation and this resulted in arrears amounting to Sh. 270 million,” she told the daily. “Before the pandemic, we were able to pay the Sh. 200 million (tax) comfortably but we had a slight delay in settling the outstanding amount.”
