KRA Demands 1.3 billion Tax From Keroche Breweries in Fresh Battle

The Kenya Revenue Authority has slapped Keroche Breweries with a Sh1.3 billion tax bill.

In a fresh twist to a long-running tussle, the taxman is demanding approximately 1 billion in tax duty relating to Keroche’s ready to drink vodka –Viena Ice.

Of the amount arising from the computing, Keroche has paid over Sh300 million under the terms applied in the past, leaving it with 1 billion in disputed back taxes.

According to a Standard report, the taxman introduced a new taxation formula that will be applied on ‘Viena Ice’ brand and will also be backdated to  be effected on the brand’s sales since June last year.

Keroche Chief Executive Officer Tabitha Karanja, yesterday, maintained that the taxman wants to change the tax from 26 shillings a litre to 120 shillings and backdate it to one year.

Ms Karanja added that her firm has been paying excise duty at Sh26.40 per litre, and KRA has always received and acknowledged the payments.

She further argued that by backdating it, they want her to remit money which she never collected, since she has been selling the vodka at 80 shillings, which is a price based on the Sh26 per litre tax, the Star reports.

Also at the centre of the controversy is interpretation of the laws on how spirits should be taxed.

Keroche argues that the targeted brand is a diluted spirit and hence what should be taxed is the amount of Vodka in the drink.

Ms Karanja maintains that a 500 ml bottle, which retails at Sh90 contains six tots of vodka equal to 188ml –which is what should be subjected to excise duty.

KRA, however, argues that Viena Ice fits the definition of compounded spirit and therefore the applicable tax would not consider the diluting.

The firm said the new tax regime would only affect its product since the company was the only maker of ready-to-drink vodka. Its competitors sell concentrated vodka.

Viena Ice is said to contribute 40% of the company’s total revenue.

The Nation reports that the Keroche CEO has vowed to seek the court’s intervention.

She says, “Keroche Breweries is filing a case seeking the court’s protection against this punitive harsh action that, if allowed to take course unchecked, will result in huge loss of revenue and ultimately, closure of the state-of-the-art, multi-billion, world-class brewery,”

This comes in the backdrop of a court battle where KRA was seeking to continue shutting down its Crescent Vodaka manufacturing plant.

Keroche has since obtained a court order stopping the closure.

See: Court Bars KRA From Shutting Down Keroche Breweries