Keroche Breweries has denied the Sh14.1 billion tax evasion accusation saying the Kenya Revenue Authority taxed 101.1 litres of water at the rate of Vodka.
CEO Tabitha Karanja was Monday, on February 6 set to appear before the court over same.
The taxes in question include Sh12.3 billion in Excise Duty and Sh2.1 billion in VAT on various products manufactured and sold by the brewer during the period from January 2015 to June 2019.
Keroche said the accusations are hot air citing that KRA taxed 101.1 litres of water at the rate of Vodka Sh120 per litre.
The brewer claims that it started to produce Viena Ready Drink Vodka by diluting 40 per cent of crescent vodka with naturally distilled water from their sources for moderate drinking from 2015 to 2019.
This is similar to six tots of vodka and 312 ml of water uniformly mixed.
The company used 60.91 billion litres of crescent vodka and 101.1 billion distilled water to make 162 billion litres of Viena Ice Ready Drink Vodka.
“Now the hot air is, the alleged tax arrears arise based on KRA’s computations subjecting the 101.1 billion litres used to dilute the 60.91 litres of Vodka to a rate of Sh120 per litre amounting to Sh14.1 billion; the alleged tax fraud as prosecuted by the ODPP in a letter publicized on August 24, 2019.
“Kenya has shortages of fools to believe that 101.1 billion of distilled water can generate Sh12 billion as excise tax unless a miracle was performed and water was turned into vodka. The only person we know who changed water into wine was Jesus and it was given for free to the multitude,” CEO Karanja said.
She said the company paid Sh7.31 billion excise duty for the 60.91 billion crescent vodka.
She claimed that KRA facilitated 329.42 billion excise stamps for the packaging of the Ready to Drink Vodka and collected the Sh7.31 excise tax for crescent vodka used.
“To our surprise, KRA went behind our backs and misinformed the DPP by falsely alleging that the 101.1 billion litres of water used of our already distilled waters from our taps should be charged as vodka at a rate of 120 per litre and should generate 12.13 billion as an excise tax.”
The company said it never charged nor collected any taxes on the distilled tap water used to make the drink.
Karanja said that the company was relieved after she received a call from the commissioner of legal KRA in early November 2022 saying they were not willing to pursue the case because of its opaque nature, instructing the company’s management to contact the DPP.
“True to his advice, the CEO followed his instructions and contacted the DPP who told the CEO it is true and he is waiting for Commissioner General Mburu to come up from his leave.”
Karanja alleged that in early December 2022, she was assured by the DPP that the process to withdraw the case had started.
She said that later KRA chairman refused to withdraw the case as advised by DPP and was resorting to the ADR process.
The company says ever since they have been struggling to be operational by borrowing huge debts.
However, on January 31, the DPP approved the charges against them.
Haji said in a statement he independently reviewed the file and applied the provisions of the National Prosecutions Policy and he is satisfied that there is sufficient evidence to charge Tabitha and her husband.
It is in the public interest to charge the suspects with 10 counts of tax fraud, contrary to the Tax Procedures Act, 2015,” wrote Haji.
The fresh charges come at a time President William Ruto has declared total war on tax cheats, vowing to ensure that all taxpayers meet their obligations, regardless of their standing in society.
Investigations by the Kenya Revenue Authority (KRA) Commissioner General had established that Keroche Breweries Limited had evaded the payment of tax totalling Sh14. 5 billion.
The taxes were accrued from Excise Duty on Stamps allocated, Sh329 million, Crescent Vodka, Sh135.4 million, Vienna Ice-
Variance quality, Sh0.8 billion, Vienna Ice, rate variance, Sh9.5 billion and Summit beer, Sh658.5 million.
Further, the brewer evaded paying VAT for the same products totalling Sh2. 1 billion during the period under review.