Yeah KRA is shutting them down. Whilst I don’t have all merits of the case, is Keroche truly forthcoming? One thing I find peculiar is, did Keroche exercise all options available to it? Big question mark here.
They could have sold off a equity stake in the business to stave off the KRA. Eg issue 10% for 500m cash and use it to bring their taxes to good standing.
Or , since they claim they have several Billions worth in land and equipment, why not size down, sell some of that and pay off KRA.
They could have floated the business in the Stock exchange. This would have raised capital for the same. I know companies that have done it.
They can wait for the next regime to make threatening calls to bail them out, but will they succeed in the longterm?
A tax obligation is not a debt to be offset by selling off assets, especially when the claimed tax is due to tax adjustment on past sales. Research on the genesis of these claims before making laughable suggestions.
I stated earlier that I don’t have merits on the case, and my suggestions are only theoretical but standard practice. And what about selling equity in the company. Let’s assume Tabitha owns 100%( not true btw), but why couldnt she sell off 10%.
A bit of context from my little involvement in the matter: The dispute goes back to 2006 when KRA demanded 1.1B from Keroche. Reason being when Keroche applied for its customs license to operate in 1996 it stated that it will be producing grape based wines. KRA later found that when applying for licensing and permits from KEBS and Naivasha Municipal Council Keroche was stated as producing cereal based alcohol and opaque beer (brown bottles). None of their products were actually grape based wines vile walikuwa wameambia KRA. The application under the wrong customs head was interpreted by KRA as a way of Keroche wanting to pay lesser customs duty (45% for grape based wines instead of 60% for cereal based and opaque beers).
Although Orengo got them off the hook in 2007, this is the genesis of their problems with KRA. By 2020 the court ordered them to pay 500M as a deposit to KRA. KRA alleges the amount in dispute ni about 9B actually.
It is unlikely that anyone would want to buy a stake in a company embroiled in tax disputes, unless the stake is highly discounted to make the risk more palatable. Clearing the arrears is not the end of the story; Keroche could still be due for more tax arrears. This means the company needs every asset it has to sustain production. Selling off assets would compromise this ability.
Companies do it all the time by the way. Subtract the tax debt( plus a margin) off equity. That’s now the new assumed equity.Yes a discount will be needed. And Keroche needs every asset, but it’s facing seizure. Last ditch effort is many times to sell off assets to raise some cash for survival. In any M&A, the acquired company could be due a liability. But that doesn’t stop those.
Will it matter to KRA where the money comes from really? Yours is the laughable one… Even without understanding the merits of the case what has been suggested is fine… But Keroche should have done long before KRA shut down the factory…
Tabitha’s entrepreneurial skills and grit aside, to date EABL still controls about 90% market share of the formal alcohol beverages. So hata that issue of sijui Carlsberg setting up shop in Naivasha, a new entrant, an international one at that, would be more worried about EABL and wouldn’t really go all out to stifle someone with <10% market share.
Plus I tend to think Keroche and Carlsberg do not necessarily serve the same market segments.
Again, poor handling by KRA for optics but not necessarily illegal. Can still be sorted out to benefit everyone affected.