Kenya Revenue Authority (KRA) has indicated its intention to settle the KES 14.5 billion tax evasion case involving Keroche Breweries founders, Joseph and Tabitha Karanja, out of court. The case, which has been ongoing for several years, is now poised for resolution through negotiations between the two parties.
On Monday, KRA informed Trial Magistrate Geoffrey Onsarigo of its desire to withdraw the high-profile case as talks for an out-of-court settlement progressed. Duncan Ondimu from the Office of the Directorate of Public Prosecutions (ODPP) confirmed his awareness of the discussions and urged for a prompt conclusion to the settlement.
The court proceedings were postponed to September 18, 2024, following the reported illness of the Karanjas’ lawyer, giving both parties more time to finalize their negotiations.
Tabitha Karanja, who resigned as CEO of Keroche Breweries in June after a 25-year tenure, faces ten tax evasion charges. Her departure leaves a company struggling with a liquidation suit and a protracted tax dispute with KRA. This dispute dates back to October 2006 when Keroche challenged KRA’s reclassification of its fortified wine products, which led to a tax assessment of KES 1.1 billion, encompassing income tax, excise duty, withholding tax, VAT, interest, and penalties.
Despite a settlement agreement reached on March 16, 2022, which included a payment plan for KES 957 million in undisputed tax arrears and the removal of agency notices that had frozen Keroche’s bank accounts, the agreement was subsequently breached. Mrs. Karanja later revealed that she signed the deal under duress, stating, “We were actually forced to sign the document after sitting in a government office for close to six hours without tea or even a glass of water.”
She explained that the agreement required them to pay KES 30 million within a month of resuming operations, which proved to be an impossible task. The KRA had initially demanded KES 21 million to reopen the factory, for which Keroche had to borrow KES 6 million to supplement their KES 15 million account balance.
The ongoing negotiations between KRA and Keroche aim to bring an end to this long-standing dispute, potentially allowing the company to stabilize and move forward without the looming threat of further legal and financial repercussions.
