KRA seizes Keroche accounts, warns banks

The Kenya Revenue Authority (KRA) has seized the bank accounts of Keroche Breweries in a push to collect Sh9 billion in unpaid taxes, escalating the fight between the brewer and the agency.

Keroche said it was unable to transact on its accounts after the KRA sent the banks an agency notice — which technically appoints the lenders to collect the Sh9 billion on behalf of the taxman.

The taxman Wednesday announced that it had won an appeal filed before the Tax Appeals Tribunal in 2015 and 2017 by Keroche, allowing it to proceed with the collection of the outstanding taxes.

“Today morning, we woke up to an agency notice issued by KRA directed to our banks to collect Sh9 billion,” said Tabitha Karanja, the founder and CEO of Keroche, on Thursday.

“This means Keroche Breweries cannot withdraw any money or transact any business from their accounts until KRA collects the alleged Sh9 billion. In short, as we speak, they have halted all our operations.”

The taxman has 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.

The taxman can post its staff to businesses owned by high-profile tax cheats, deploying them to the accounts departments, to recover unpaid taxes.

On Thursday, the KRA declined to comment on the seizure of Keroche’s bank accounts.

The banks will have to abide by the KRA order or risk being slapped with fines equivalent to double what is being pursued from Keroche or have their executives face a jail term of five years or both.

“I hereby declare you to be an agent of the above taxpayer (Keroche) and require you to pay me Sh9.1 billion,” said the KRA notice sent to Equity Bank on Wednesday.

“If without reasonable cause you fail to comply with this notice, you shall be personally liable for the amounts specified.”

Keroche’s main asset is its brewing plant in Naivasha where it manufacturers the Summit Lager and Summit Malt beers.

The company is seeking to stave off the impending enforcement action by appealing the tribunal’s decision.

“Even as we speak, we do not have the TAT [Tax Appeals Tribunal] ruling. Our lawyers have been advised to wait for it. Our assumption has been that KRA too don’t have the ruling. Is KRA influencing the Tribunal?” Mrs Karanja posed.

Keroche, which started by making spirits and wines in 1997 before diversifying into beer in 2008, has termed the KRA’s announcement to enforce the tribunal’s decision premature.

The company argued that production of its Vienna Ice did not amount to manufacture since the liquor is processed by diluting Crescent Vodka.

The brewer said that because of this, the two brands are one and the same product.

The taxman, for its part, relied on the Compounding of Denatured Spirits Act Cap 123 to argue that the process undertaken by Keroche amounted to manufacture of a new product.

The other disputes hinged on the classification of wines and the associated taxes.