250 Workers Face Layoff as KRA Shuts Down Keroche Breweries in Sh322 Million Tax Row

Keroche Breweries CEO Tabitha Karanja has pleaded with President Kenyatta to intervene in the company’s ongoing tax row with Kenya Revenue Authority (KRA), which has paralyzed its operations.

In a media briefing on Friday, Karanja warned that they will be forced to lay off 250 workers in the next seven days if the brewer is not allowed to resume operations.

She says they have two million liters of beer worth Sh512 million in their storage, but cannot sell it after KRA shutdown the company last month.

The taxman is demanding Sh322 million in unpaid taxes from the beer manufacturer dating back to February 2021.

“From February 1st, 2022 to date, we have remained closed and yet we have over two million litres of beer worth about Sh512 million in our tanks which have fixed costs to a tune of about Sh30 million required to maintain the same monthly,” said Karanja.

“This 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.”

The CEO says the company asked to be given 24 months to offset the tax arrears but KRA insisted that they settle the debt in six months’ time from February 2021.

“Failure to be up to date on the payments was explained to KRA as low business leading to poor cash flows that could not fully meet all the cash obligations of the company…We subsequently entered into a proposed payment plan with KRA, but we could not manage to honor the same due to frequent interruptions by KRA,” said Keroche.

“On December 7th, 2021 KRA closed the factory and further issued agency notices to 36 banks in Kenya. This completely collapsed all our business operations since we could neither produce, sell nor access any financing from any of the banks to assist in settling the arrears.”

The taxman reopened the factory on December 22nd, but Keroche says the earliest its products could reach the market was on December 27th, 2021. 

“We only managed to sell for three days till the end of the year but KRA was on our case demanding the arrears according to the payment plan. We remitted Sh10 million which was available in our accounts then, which to them was insufficient,” said Keroche.

Since then, the company has been opening and closing in an irregular pattern due to the tax demands.

“On January 31st, 2022, KRA closed the plant once again. In such circumstances of operating less than a week, it was impossible for us to raise the amount of money KRA were demanding. We managed to make a further payment of Sh2.5 million within the short period we were in operation.”

“At this point, they refused to accept further negotiations and the office of the Commissioner-Domestic Taxes Department, advised us that their hands were tied and we should seek support from the Office of the Commissioner-General. Since then we have been trying to reach, and even going to his office but we have been unable to reach him for his intervention.”

Keroche has written to President Kenyatta seeking his intervention, arguing that several jobs are at stake.

“We are urging the President to kindly but urgently request the re-opening of our plant to prevent huge losses and enable us to resume production, sales and distribution and most importantly protect and safeguard the livelihoods of thousands of Kenyans employed by the company both directly and indirectly.

They also want the president to request KRA to give the company a 12-month grace period on the taxes in arrears.