Kenya’s Keroche Breweries accused of $140 tax fraud

Aug 22, 2019

Keroche Breweries
Kenya’s Director of Public Prosecutions (DPP) has accused Kenya’s second largest brewery of failing to pay Excise Duty and VAT amounting to KSh14.4bn ($140m) on its various products including Summit beer, Crescent Vodka and Viena Ice between January 2015 and June 2019.

Keroche Breweries has denied the accusations. The DPP has ordered that the Naivasha-based company’s owners Tabitha Karanja and her husband Joseph Karanja face 10 charges of tax fraud. It alleges that VAT totalling KSh12bn ($116m) was not paid on Keroche Breweries brands.

Alcohol smuggling, tax evasion and counterfeiting for alcohol in Kenya is rife. Research by Kenya’s Anti-Counterfeit Authority shows 50% of Kenyans by counterfeit goods knowingly because they are much cheaper.

All bottles of alcohol must carry a stamp that shows duty has been paid to the Kenya Revenue Authority (KRA). In factory tax compliance means that brewers must pay KSh1.50 ($0.015) for every stamp while each bottle of spirits must have a KSh2.980 ($0.029) stamp.  Excise tax on a 250ml bottle of beer is KSh56 ($0.54), while a 250ml bottle of spirits attracts a tax of Ksh70 ($0.68). VAT of 16% is also added. Furthermore, there are taxes and county level as well as national level.

In his 2019/2020 financial budget released in June, Cabinet Secretary Henry Rotich has proposed that excise duty on cigarettes, wine and spirits is raised by 15%. The changes have been fiercely rejected by tobacco and drinks companies. It means a bottle of spirits will increase in price by KSh24 ($0.24) while the price of a packet of cigarettes will increase by KSh8 ($0.08).

Kenyan tycoon Humphrey Kariuki, owner of Africa Spirits Ltd and WoW Beverages in Thika, has also been arrested on tax evasion and fraud charges relating to unpaid taxes of KSh41bn ($39.8m). Africa S

Early this month, Africa Spirits, which owns brands including Glen Rock, Legend Black, Blue Moon, Legend Brandy, Gypsy King and Furaha, was closed down.  Inspectors found 312,000 litres of illegal ethanol on site, as well as 21m counterfeit excise stamps worth KSh1.2bn ($11.7m).

Loading...

Looking for more trends and insight on FMCG in Africa?

Join Trendtype's mailing list for news, events and more.

Thank you for joining us. Speak to a member of our team today on +44 333 567 9995

Looking for more trends and insight on FMCG in Africa?

Join Trendtype's mailing list for news, events and more.

Thank you for joining us. Speak to a member of our team today on +44 333 567 9995