Kenya Revenue Authority has defended its decision to close down Keroche Breweries after years of multiple tax disputes.
The decision by the authority to shut down the brewer last week over a Sh332 million tax arrears elicited varied reactions from leaders, the public and the owner.
Keroche’s chief executive officer Tabitha Karanja had asked the taxman for a grace period to clear the tax obligation, saying the Covid-19 pandemic had adversely affected its revenue flows.
However, KRA yesterday justified its action while highlighting years of tax disputes with the Naivasha-based brewer. It said turning a blind eye on the Sh332 million tax arrears would be unfair to other Kenyan brewers.
“By allowing any taxpayer to continue collecting taxes and not remitting the same, KRA will not be executing her mandate of ensuring that taxes that fall due are remitted in a timely manner and that all taxpayers remit their fair share of taxes,” it said in statement.
The tax collector said it would not go for a shilling more and or a shilling less from the brewer.
It said not dealing with the matter would distort the market and end up killing tax paying business at the expense of those that do not remit taxes.
“In the end, no taxes will be paid and employment will be lost when the tax paying businesses close down due to unfair competition from those not paying taxes,” said the statement.
According to KRA, Keroche has reneged on all payment plans despite acknowledging the debt.
In July 2021, Keroche agreed it owed a total of Sh272,211,842 comprising of Sh134,447,847 in principal taxes and Sh137, 763, 995 in interest and penalties.
The brewer offered to pay the principal taxes of Sh134,447,847 in nine monthly instalments starting from September 25, 2021, a payment plan KRA says was not honoured.
In another plan, the brewer proposed to pay Sh500 million in 24 equal instalments starting December 2021 but failed to comply, according to the taxman.
“In the two agreements, Keroche Breweries was to apply for remission of penalties and interests upon full settlement of the outstanding principal tax liability. Keroche Breweries Ltd has not honoured the payment of instalments as per the agreements,” KRA said.
KRA said to allow a manufacturer to sell their products without levying correct taxes or to collect taxes without remitting amounts to granting those evading taxes undue advantage over the many law-abiding tax payers who diligently pay their taxes.
In her appeal to President Uhuru Kenyatta, Karanja requested for the reopening of the factory and for KRA to give them a grace period of twelve months to clear the arrears.
“Keroche is capable of remitting over Sh21 billion every year in taxes and a positive consideration of this appeal will be a win for both the company and KRA,” she said.
Karanja, who has expressed interest in the Nakuru County senatorial seat, said Parliament should formulate laws to protect and cushion local enterprises.