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Reprieve for Keroche in tax fight with KRA

Thursday June 25 2020
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Keroche Breweries Chief Executive Officer Tabitha Karanja (left) and her husband Joseph leave Milimani Law Courts on September 2, 2019 after the mention of their tax evasion case. PHOTO | FILE | NATION MEDIA GROUP

By MAUREEN KAKAH

Keroche Breweries was Thursday directed to pay Kenya Revenue Authority Sh100 million as a condition for stopping the taxman from attaching its accounts over a Sh9.1 billion tax dispute.

The Court of Appeal ordered Keroche to make the payment within 45 days.

“Taking all the relevant factors into consideration, including the challenging economic circumstances the Covid-19 pandemic has put the country and indeed the entire world under, we are inclined to grant a conditional stay of execution,”  the three-judge bench ruled.

They added: “The stay of execution is conditional upon Keroche Breweries paying to KRA Sh100 million within 45 days from the date of this ruling, failing which the said orders shall lapse and the application by the said company will stand dismissed.”

The Naivasha-based brewer moved to the Court of Appeal in March, fearing that KRA would attach its bank accounts for failing to pay Sh500 million to the KRA.

In the petition, Keroche CEO Tabitha Karanja wanted the Sh500 million reviewed, adding that the effects of the coronavirus pandemic including closure of bars and night clubs has hurt its sales.

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The company reckons that it cannot borrow from banks because it is running on overdrafts and owes lenders like Absa Kenya.

“This is, however, not possible at the moment since the appellant (Keroche) is already heavily indebted on account of overdraft facilities and numerous bank loans from Absa Bank Kenya Plc, which it is required to service through monthly installments of Sh57,000,000,” she said.

“The appellant has carefully examined its financial books and it is clear that it is not in a position to pay the respondent (KRA) Sh500 million,” she added.

The court will hear Keroche’s petition on Monday, offering the brewer a three-day reprieve.

Justice David Majanja had on March 16 ordered Keroche to pay KRA Sh500 million as a condition to stop the taxman from recovering Sh9.1 billion from the brewer.

Justice Majanja said that if the brewer failed to pay the amount in 30 days, an order stopping KRA from recovering the amount by attaching Keroche’s accounts would lapse.

This came after Keroche secured an order barring KRA from seizing its bank accounts and protection from forcible transfer of cash from the lenders to the taxman.

The KRA had ordered five top banks to transfer cash in Keroche’s bank accounts to the agency’s coffers, grounding the brewer’s operations.

The taxman had hinged its aggressive action on the Tax Procedures Act, which empowers it to seek taxes directly from third parties like banks, employers and suppliers as well as seize and auction property to recover unpaid tax.

The Act also gives the KRA powers to freeze tax cheats’ property transactions and ultimately auction the assets to recover the unpaid tax.

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