Kenya: A look into Keroche’s tax evasion case

Kenya's second largest alcoholic beverage company, Keroche Industries, is embroiled in a legal battle over alleged tax evasion amounting to 14 billion shillings by the Kenya Revenue Authority. The company's CEO, Tabitha Karanja, also a politician and senator for Nakuru County, has vehemently denied the charges. The ongoing case sheds light on a broader issue within Kenya's evolving taxation landscape. CNBC Africa's senior correspondent, Terryanne Chebet, provides insights into the matter from Nairobi. The dispute between KRA and Keroche dates back a couple of years, with arrests made on the founders and directors over tax evasion accusations. Despite Karanja's political position and a previous clearance to run for office, the scrutiny of Keroche's tax practices persists due to President William Ruto's focused approach on tax compliance. The fluctuating figures of the alleged tax evasion, initially cited at 14 billion shillings, have raised questions and caused a stir in the tax arena. The case is ongoing, and the next court date is anticipated to be set months ahead, with Keroche contesting the accuracy of the reported figures. The inconsistent numbers and the high-profile nature of the company and its founder ensure continued media coverage in the near future. President Ruto's tax reforms have significantly impacted the manufacturing sector, imposing challenges with increased excise taxes and inflation adjustments. The sector, a critical contributor to the GDP, faces competitiveness concerns under the changing tax environment. The Kenya Association of Manufacturers highlights the strain on local manufacturers and urges for a more predictable tax regime to uphold global competitiveness. With the government targeting a tax collection of three trillion Kenyan shillings by 2024, debates arise on the feasibility of this goal. Factors such as untaxed populations and tax exemption discrepancies play a pivotal role in achieving the revenue targets. The need for transparency in exemption beneficiaries and innovative tax collection strategies underscores the government's task of bridging fiscal gaps. Amidst the evolving taxation landscape, Kenya grapples with balancing revenue generation and economic competitiveness.