Keroche Breweries has struck an agreement with KRA allowing it to reopen after closure due to tax arrears.
KRA, Keroche strike deal to reopen closed factory
Details of Keroche's deal with KRA
In the agreement signed on Wednesday, March 16, Keroche committed to paying Sh957 million in two years.
This will now save the company which owes in excess of Sh22 billion in tax arrears from permanently shutting down.
KRA also lifted a notice sent to 36 banks cautioning them against lending the breweries money.
Keroche CEO Tabitha Karanja had raised concern that the firm was on the verge of sending home over 250 workers and pouring alcohol worth over Sh512 million that is currently stored in tanks.
“The recent closure by KRA has drained all our resources and unfortunately if nothing is done in the next seven days, we will be forced to drain down all the beer and lay down over 250 direct employees and thousands within our nationwide distribution network,” Ms Karanja said.
She accused her business competitors of using the taxman to run the company down but in a rebuttal, KRA detailed the history of negotiations with Keroche over the Sh22 billion tax bill.
At the start of 2022, Keroche was also expected to pay Sh351 million as principal tax which the company withheld for the period January 2021 to date.
This means that Keroche Breweries Ltd had been collecting Excise Duty Tax and VAT from its consumers through the sale of its products but has not been remitting the taxes to KRA.
In a letter dated December 14, 2021, Keroche offered to pay the debt by instalments of Sh20 million from January 2022 to October 2022 and thereafter Sh30 million for the Month of November 2022 and Sh 50 million for the month of December 2022.
However, Keroche only paid Sh10 million and dishonoured the agreement.
“To allow a manufacturer to sell their products without levying correct taxes or to collect taxes without remitting will amount to granting those evading taxes undue advantage over the many law-abiding taxpayers who diligently pay their taxes. It is to introduce distortions in the market that will end up killing tax-paying businesses 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 taxpaying businesses close down due to unfair competition from those not paying taxes,” KRA concluded.
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