NAIROBI, Kenya, Mar 13 – Keroche Breweries, a Naivasha-based brewer is fighting a touch war to remain in business after the Kenya Revenue Authority (KRA) Thursday notified bank managers freeze withdrawals and until the agency reclaims Sh9bn following a Tax Appeals Tribunal (TAT) ruling made in their favour on Wednesday.
The drastic decision has brought operations at the brewery which prides itself as distinctly Kenyan to a halt, KRA coming under fierce criticism for institution punitive action even before a 30-day appeal window lapses.
It is a tax feud that the breweries Chief Executive Officer Tabitha Karanja Thursday said has lasted at least 23 years, but one that it is not over yet since she is proceeding to the Court of Appeal.
Already, Karanja revealed, KRA’s demands had risen to Sh23bn.
“In six months your organization has made unexplained and unrealistic demands that have now reached Sh23bn,” she wrote in a letter addressed to KRA Commissioner General Githii Mburu.
“Let it be known that the management of this issue and its impact goes beyond the well-being of Keroche Breweries. It has a global effect on the future of Kenya’s business environment. At stake are the dreams of many local entrepreneurs and investors who Keroche Breweries has inspired to believe that it can be done,” Karanja said.
The dispute, she said, is based on the attempt by KRA to tax the water used to dilute their ready-to-drink vodka, at the same rate as the vodka which amounts to Sh253 per litre in addition to Value Added Tax (VAT).
“The President has stated many times that local and multinationals have equal rights. The government in line with other governments should shy off from providing locals the right incentives to grow Kenyan’s economy.”
How did it all start?
During the arbitration process, Karanja noted that KRA did not present any new evidence.
According to the CEO, KRA “filed the same letters that they had used 14 years ago in the case the court had quashed. We feel aggrieved that TAT clearly failed to abide by the guidelines on new evidence.”
She said the dispute had bread “confusion” on the correct applicable rate “of our Viena Ice ready to drink vodka.”
The drink is composed of 321ml distilled water and 188ml vodka, which amounts to 500ml Ready to Drink Vodka.
Karanja said KRA wanted to tax the water used to “dilute the vodka at the same rate as the vodka.”
“This makes it the most expensively charged water in the world. The computation done by KRA is punitive, unacceptable and amounts to robbing Kenyans in broad daylight.”