Keroche Breweries, Kenya’s second-largest beer maker, is facing a financial crisis after it defaulted on a tax repayment plan.
In its long legal battle with KRA, Keroche Breweries based in Naivasha was shut down by KRA officials last year but the matter was amicably resolved.
However, last week officials from KRA went back after the brewer defaulted on an earlier agreed tax repayment plan.
The firm’s CEO Tabitha Karanja in an interview with business daily said that the company is facing cash flow challenges which had also caused the two-month salary delay.
She dismissed claims by some of her employees that the salary arrears were now running into six months.
“To be candid, the ripple effect of the disease greatly affected our tax obligation and this resulted in arrears amounting to Sh270 million,” Mrs Karanja said in an interview at her office.
“Before Covid-19 hit us hard, we were able to pay the Sh200 million (tax) comfortably but we had a slight delay in settling the outstanding amount.”
The Keroche boss said the KRA has been more understanding to the plight of the alcohol industry, which saw them agree on a new payment plan.
In its tax dispute with the KRA, the company has chosen alternative dispute resolution (ADR).
She said the taxman had closed the firm for at least two weeks before the present deal, but that full activities had resumed.
“We are hoping to continue honouring our tax obligations going forward as things are now looking up,” she said.
“We have weathered the storm and with the goodwill from the KRA, we shall continue to pay our taxes,” she said.
Keroche has been expanding in recent months, establishing two new brands in order to enhance its market share.
It just debuted the Viena Ice Strong Lager, which has a 10% alcohol content and is aimed at a wide range of consumers.
Brand X, a beer with an alcohol concentration of 8.8%, was also revealed by the brewery.
The KRA also stated that it had provided an olive branch to the brewer, including engaging into an alternative dispute resolution agreement or a payment plan, but that the brewer had refused. The case is now being resolved outside of the courtroom.
Mrs. Karanja last year announced that she is relinquishing her position to run for the Senate seat.