From-left-Kenya-Kwanza-Alliance-coalition-leaders-Tabitha-Karanja-Justin-Muturi-Rigathi-Gachagua-and-Dr-William-Ruto.
Worth Noting:
- I will ask if the Cabinet Secretary has ever taken time to understand the standoff between KRA and the company. KRA have exerted their authority with cavalier approach on collection of taxes recklessly disregarding the effects of their actions, thereby ‘killing the goose that lays the golden egg’. It is good to note that as KRA is applying the Excise duty Act to close down Keroche Breweries, the excise duty arrears amount to only about Kshs.195 million, of which we defaulted on only one (1) instalment of Kshs.30 million for April 2022.
- We would like to clarify that the payment plan for tax in arrears signed between KRA and the company included an amount of Kshs.500 million goodwill payment proposed by the company on historical hypothetical taxes.
First of all, I wish to sincerely thank His Excellency the Deputy President Dr. William Samoei Ruto, the Rt Hon. Raila Amolo Odinga and Kenyans at large for putting aside their political differences to support our local Kenyan industry that is under serious siege. We note with appreciation that this weighty business matter facing Keroche Breweries has been separated from politics and its sideshows.
I wish to dispel the narrative that has been created by Kenya Revenue Authority (KRA) that Keroche Breweries Ltd is a non-compliant taxpayer who perpetually default on their tax obligations. The truth of the matter is that there have been tax disputes dating back to 2002 and the company in exercising its constitutional right to fair taxation should not be blacklisted. The good news is that the company in 2021 opted for an out of court settlement of cases through the Alternative Dispute Resolution (ADR) and on a without prejudice basis managed to settle two historical cases.
I was thinking aloud on Sunday afternoon and pondering how I will relay the painful message to our employees on Monday that we will be laying them off as a result of KRA’s closure. I was also at pains as I looked at all the beer in the tanks that we shall be forced to drain to waste and wondered why and how the following relevant ministries remain so indifferent to the dire consequences of the current closure of the company’s factory;
- Ministry of Labour, Social Security and Services.
The company is at the verge of laying off over 400 employees due to the illegal, punitive and draconian actions by the KRA. The Ministry ought to be concerned and interrogate the matter as it is constitutionally mandated to safeguard the welfare of labour and legally obligated to protect all Kenyan workers.
- Ministry of Industrialisation and Enterprise Development.
As the ministry’s name indicates, they should at all time defend local investments and enterprises, and take all lawful measures to support them to develop and grow. Does the Ministry understand how long it takes to build an enterprise even half the size of Keroche Breweries? They should not and CANNOT sit put and watch existing Industries being brought to their knees by the very government agencies that are meant to facilitate growth. This will surely erode investors’ confidence in our country.
- The National Treasury.
I will ask if the Cabinet Secretary has ever taken time to understand the standoff between KRA and the company. KRA have exerted their authority with cavalier approach on collection of taxes recklessly disregarding the effects of their actions, thereby ‘killing the goose that lays the golden egg’. It is good to note that as KRA is applying the Excise duty Act to close down Keroche Breweries, the excise duty arrears amount to only about Kshs.195 million, of which we defaulted on only one (1) instalment of Kshs.30 million for April 2022.
We would like to clarify that the payment plan for tax in arrears signed between KRA and the company included an amount of Kshs.500 million goodwill payment proposed by the company on historical hypothetical taxes. This was to facilitate conclusion of matters settled out of court and create a conducive working platform for the company.
The company had however requested for a moratorium of 6 months before commencing payments because of post-Covid effects that were aggravated by several closures of the factory between December 2021 to date and Agency Notices issued to the Banks. The company still requests for the moratorium in order to have a head start and for reorganisation of the finances both internally and externally for its operations and for payment of taxes going forward.
- Ministry of Interior and Coordination of National Government.
It should be of their concern that about 400 direct and thousands of other indirect jobs are on the brink of being lost. They will be joining millions of other jobless Kenyans. Economic conditions continue to worsen as the cost of living, poverty and inequality punish more and more Kenyans to harrowing misery. Prices of basic commodities are already beyond the reach of many who have work, and the survival of the millions without livelihoods may drive desperate people to crime. This is a national security issue that the ministry MUST be concerned about, yet the casual manner in which job losses are induced by reckless application of government policy, suggests that the gravity of the problem is yet to get home to the ministry.
Conclusion
It is worth noting that Keroche Breweries earned monthly revenues of between Kshs.400 million and 500 million pre-Covid-19. After the prolonged closure, the revenues dropped to below Kshs.50 million. During the two years of Covid-19 pandemic, the company ensured that the livelihood of its employees was sustained which really strained its resources. The post-Covid effects and the on and off closures of the company’s factory by KRA have left the company a shadow of the pre-Covid establishment.
Let us remember that under our economic system, Government does NOT build industries, it only provides a conducive environment for growth of industries. Most importantly it is the government’s role to ensure that its policy measures and operational environment enables existing industries survive, grow and become competitive, especially during hard economic times occasioned by issues such as technology and Covid-19 pandemic. The Government needs to cushion Industries facing difficulties especially local industries which have no parent companies in other jurisdictions to cushion them, like the multinationals. This is the best practice worldwide.
It is my humble request that all the relevant authorities be requested to rise to the occasion in order to amicably resolve the current issue and further protect and create a conducive and enabling environment even for other industries that may be suffering in silence.
Finally we would be happy to have audience with the Commissioner General of KRA in order to once again articulate our predicaments as we seek for the moratorium.
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