Over the years, the country has witnessed a number of big companies close or get shut down over tax disputes with the Kenya Revenue Authority (KRA). A majority of these cases have been dragged through court for several years, dominating news headlines in the process.
The last five years have featured tax disputes between KRA and some of the largest companies in the country, with figures thrown around being in the tune of billions of shillings. While some companies have managed to come out of the disputes to go on about their businesses, others did not survive.
In this article, WoK takes a look at some of the companies that have been embroiled in disputes with KRA.
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Mount Kenya Breweries
In April 2021, KRA shut down Mount Kenya Breweries for fake stamps and failure to file tax returns. The Nanyuki-based brewer’s chairman and directors were on the run for more than two weeks even as KRA accused them of defying the orders to surrender to the taxman and shed light on the investigations.
The taxman shutdown the brewer following the raids on their factory in Nanyuki on April 9 and 10, 2021 on allegations of using fake excise duty stamps on their spirits brands and failure to file tax returns.
“Directors and chairman have not surrendered to the authority. They were suspended under section 20 of Excise Duty Act NO. 23 of 2015,” KRA said.
KRA, however, did not disclose the amount of revenue it was loosing to the use of fake excise duty stamps.
“Investigations are still ongoing and the intention is to suspend the license, establish the extent of revenue loss, prosecute the company and directors for tax evasion as soon as investigation is complete,” KRA added.
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Mount Kenya Breweries manufactured Sparkler Vodka packaged in 250ml.
In April 2019, KRA in conjunction with the Directorate of Criminal Investigations (DCI) raided a plant in Thika owned by Africa Spirit, which manufacturers Glen Rock, Legend Black, Blue Moon, Legend Brandy, Gypsy King and Furaha over allegations of tax evasion.
The taxman claimed that the company was using fake excise duty stamps on their products.
KRA recovered 312,000 litres of illicit ethanol from the company premises, together with the 21 million counterfeit excise stamps. The ethanol was estimated to be worth Ksh1.2 billion.
“This operation is part of the Government ongoing campaign against illicit trade aimed at ensuring compliance with tax and consumer protection laws,” read a joint statement from KRA and DCI.
KRA also sought Ksh17 billion in taxes from Africa Spirits owner Humphrey Kariuki. However, the taxman lost the case against the billionaire in a ruling delivered by Justice Anthony Mrima on May 25.
He noted that KRA cannot be the investigator and prosecutor which he said was an encroachment of the powers of Director of Public Prosecutions (DPP).
However, KRA has since appealed the ruling.
“The KRA maintains the position that the declaration contradicts Article 157(12) of the Constitution which allows Parliament to enact legislation conferring powers of prosecution on authorities other than the Director of Public Prosecution,” KRA said.
KRA shut down Keroche Breweries again on June 14, 2022, on allegations that the Naivasha-based brewer had defaulted in an earlier agreement on the settlement of tax arrears. According to reports, the brewer was to pay Ksh30 million per month until the arrears owed to KRA are settled.
In March this year, Keroche and KRA made an arrangement that would see the Tabitha Karanja-headed brewer settle an undisputed tax amount of Ksh957 million over a period of 24 months starting from January 2022.
However, Ms Karanja claimed that efforts by the company to seek more time to pay the arrears had hit the wall.
“KRA has issued agency notices to the company’s bankers and instead of correctly notifying the banks of the Ksh300 million we owe, it gave a wrong figure of Ksh558.7 million,” she said.
Diamond Crystals Enterprises
In August 2018, KRA shut down and seized more than 1,000 pieces of bottled water and a pickup truck from Diamond Crystals Enterprises.
The taxman claimed that the plant which is located in a residential area within Embakasi was sealed off for manufacturing water without an excise licence contrary to section 15 of the Excise Duty Act 2015.
KRA also noted the operations of the plant registered under Diamond Crystals Enterprises were also in contravention of Section 38 of the Excise Duty Act 2017 as read with Regulation 30 of Legal Notice 53 of 2017.
Two hundred and twenty pieces of five-litre bottled water and 792 pieces of 500 millilitre bottled water had already been loaded on to the waiting pickup truck outside the premises ready for the market when KRA officials arrived. Twenty pieces of five-litre bottled water were still within the premises.
According to the taxman, the officials were working on a tip off from members of the public.
The director of the company was summoned by KRA for allegedly manufacturing, possessing and conveying an excisable product without an excise licence and tax evasion.