Following a protracted tax dispute with the Kenya Revenue Authority (KRA) that caused it to shut down its operations for months, troubled brewer Keroche Breweries has sent 370 employees home on indefinite unpaid leave.
The brewer announced on Thursday that it has decided to send its staff members home since operational funding has run out since the taxman closed the business on May 15.
Despite the taxman lifting the plant’s blockade in March, KRA has pledged not to reopen the brewery, accusing it of breaking an arrangement to stagger tax payments and failing to pay excise taxes.
“Yes it is true we have asked our workers to proceed on unpaid leave as we have run out of funds to run the company,” said Tabitha Karanja, the CEO.
“We consider the decision by KRA to close our plant illegal and we will fight it,” she added.
In an internal notice to employees seen by the Business Daily, Keroche asked its employees to proceed on unpaid leave.
“It is almost two months since the packaging line was closed by Kenya Revenue Authority due to the Tax issue which you are all aware of. The management has tried to sustain the business despite the disruptions and closure, which has left the Company paralyzed with no means of getting any income to cater for its operational cost, pay salaries and other financial obligations, leading to several months of accumulated salary arrears,” said the brewer in the memo to staff.
“In this regard, the management has had to make a difficult decision to release all employees from work. We shall only retain the service of a few persons from the quality department and engineering maintenance,” it said.
The brewer, according to Mrs. Karanja, was no longer able to support the staff due to the closure and was unable to pay their Sh20 million monthly salary.
According to KRA Commissioner General Githii Mburu, after reopening in March, Keroche has broken the terms of tax arrears payments and has failed to pay a single penny in duty from beer sales.
He noted that Keroche was aware that the March agreement gave the taxman the right to pursue enforcement action in the event that payment terms were broken.
