NAIROBI, Kenya, June 14 (Reuters) – Local brewery Keroche Breweries has asked the Kenya Tax Authority (KRA) for a moratorium on paying Sh322 million in tax arrears, noting that the tax official allowed the Naivasha-based brewery to operate despite initial agreements in May.
The company’s chief executive, Tabitha Karanja, said in a statement that on May 15 the tax officer took enforcement action and closed the brewery, leaving 10,400 employees unemployed and making life difficult for several farmers who now no longer sell their products to the brewery can sell feasts.
“After negotiating with a large team of your commissioners and top officers, we were forced to enter into an agreement which the company’s performance could not support in its implementation. Our requests for a deadline to resume payment when full operational performance was reached were denied, but KRA promised that we would walk the path of recovery together,” Karanja said.
“Unfortunately, on May 15, 2022, without prior notice, KRA took enforcement action and closed the brewery,” she said in a statement seen by Capital FM.
In March, the brewery closed due to accumulated tax arrears, but Keroche later asked for an 18-month grace period to resume operations and stated his willingness to sit down with KRA again to create a more realistic payment schedule.
It later reopened and was given 24 months to pay tax arrears, starting with goodwill of sh21million.
But it is now appealing to the government to give it more time to get back on its feet as a manufacturer, employer and business entity and meet its commitments.
“KRA’s draconian measures against Keroche Breweries Limited do not take into account the difficult times our economy is going through which is seriously threatening many jobs and livelihoods. KRA’s deliberate actions also do not recognize the difficulties employers have faced due to the disruption caused by the Covid-19 pandemic, as well as the severe strain that manufacturers’ business ecosystems have suffered,” Keroche said in a statement.
Among his concerns is that the feud with KRA has destroyed its distribution network and increased its risk levels at many banks, which are now reluctant to fund its operations.
“KRA’s actions to issue agency notices to all banks in Kenya have created a harsh investment climate. Some banks with whom we have arranged financing are struggling because frequent closures increase the level of risk. Our distribution network, broken by Covid-19, is much harder to repair,” Karanja said.
“Our distribution network, which was broken by Covid-19, is much more difficult to repair,” she criticized.