Keroche suffers setback in Sh9bn tax row

The High Court has dealt a blow to Keroche Breweries Ltd after rejecting a petition by the Naivasha based-brewer to cut the demand to pay Kenya Revenue Authority (KRA) Sh500 million, setting the stage for the seizure of its assets by the taxman.

Justice David Majanja dismissed the company’s plea that it did not have funds to pay the taxman within 30 days in line with an earlier court directive.

In the petition, Keroche CEO Tabitha Karanja wanted the Sh500 million reviewed, adding that the effects of the coronavirus including the closure of bars and night clubs has hurt its sales. The company reckons that it cannot borrow from banks because it is running on overdrafts and owes lenders like Absa Kenya, and was willing to pay Sh10 million.

“I have considered the facts set out by the appellant and I find nothing new has arisen in regard to the nature of the appellant business in relation to its tax ability, hence I decline to vary the appellant an unconditional order of stay,” said the judge.

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