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The Battle of the Titanics

The Kenya Revenue Authority (KRA) is set to collect over Sh9 billion from Keroche Breweries after winning six appeal cases filed by the firm. In the three appeals before Tax Appeals Tribunal, the contention was in the manufacturing process of Vienna Ice Brand of Vodka. The brewer argued that, Vienna Ice brand of Vodka was produced by diluting Crescent Vodka, a process that did not amount to manufacturing. KRA relied on the compounding of denatured spirits act cap 123 and argued that the process undertaken by Keroche Breweries was compounding within the meaning of the act. “Compounding of spirits also amounted to manufacture of new product within the definition of customs and excise act, cap 472 now repealed.”

In August last year, the Director of Public Prosecutions Noordin Haji ordered the arrest of Keroche Breweries Limited proprietors Tabitha Karanja and Joseph Karanja over allegations of Sh14 billion tax fraud. Ordering the arrest, Haji said Kenya Revenue Authority Commissioner-General Githii Mburu submitted an inquiry file to his office on August 18 and an audit which established that Keroche had evaded tax totalling Sh14,451,836,375. The inquiry relates to the alleged failure to pay tax on various products manufactured and sold by the company from January 2015 to June 2019.

The DPP noted that investigations revealed that the company evaded paying Sh12.34 billion Value Added Tax (VAT), Sh329.4 million for stamps and Sh135.4 million for Crescent Vodka among other products. Tabitha accused the taxman of selective and unfair targeting, arguing that she has always followed the law and was shocked to be accused of tax evasion when the matters were still under a tax tribunal.

Senior counsel James Orengo, representing Tabitha and her husband Joseph Karanja told the Chief Magistrate that the amount on the charge sheet was disputed. “We plead to the court that you do not get attracted to the figures on this charge sheet. The amount is contested. There is a whole process in computing and demanding money. The amount is speculative,” argued Orengo. Mr Karanja was granted Sh5 million bond or Sh2 million cash bail and given a week to pay, while the Keroche CEO Tabitha was granted Sh10 million cash bail or Sh15 million bond. Their company was granted Sh15 million cash bail. Tabitha Karanja and husband Joseph Karanja founded Keroche Breweries in 1997. Initially making a fortified wine, the company has since moved into spirits and, from 2008, making beer. The business is said to have a 20 per cent share of the overall drinks market in Kenya, and 5 per cent of beer sales.

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