The Kenya Revenue Authority (KRA) has revealed that the beleaguered Naivasha-based Keroche Breweries owes it Sh22.79 billion in unpaid taxes, casting doubt on the brewer’s survival.
In an unusual move, the taxman detailed the 16-year struggle with Keroche, including details of unpaid business tax, excise duty, VAT, and penalties totaling Sh3.02 billion.
The KRA’s announcement came in response to Keroche’s request for President Uhuru Kenyatta’s involvement after the authority shut down the beer maker’s activities and blocked its contacts with 36 banks, worsening the crisis.
The taxman is asking Sh22.79 billion, which is about the same as the Sh24.9 billion paid to the KRA by Safaricom, East Africa’s most profitable corporation. It is more than the market value of Kenya Airways and over half of the enterprises listed on the Nairobi Stock Exchanges (NSE).
The KRA accuses Keroche of failing to follow through on agreed-upon strategies to pay off the tax arrears, including a promise to pay half a billion shillings monthly beginning in December to wipe off a Sh4.49 billion deficit.
“Keroche has not honoured the payment of instalments as per the agreements,” said the KRA in a statement.
The Sh4.49 billion was part of a Sh7.54 billion tax demand, which included penalties of Sh3 billion.
Keroche appealed to the Treasury to write off Sh3.99 billion on agreement it would pay the Sh4.49 billion. The Treasury is yet to respond to the request.
The KRA crackdown is a setback for Keroche, which intended to capitalize on a wave of consumer patriotism among Kenya’s burgeoning middle class to eat into EABL’s market share with its Summit Lager and Summit Malt brews.
Diageo-owned EABL has dominated the market with brands such as Tusker and Guinness beers, as well as Johnnie Walker whisky and Smirnoff vodka. During the late 1990s beer battles in Kenya, it drove out London-based SABMiller.
Following Keroche’s arrival, commentators speculated on “Beer Wars 2,” which now appears improbable if the KRA follows through on its multi-billion shilling tax demand.
Keroche’s finances, as a private corporation, are not public, although it is likely to struggle to raise billions of shillings.
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