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Companies

Coca-Cola locked in Sh516m advertising bill claim with KRA

Kenya Revenue Authority headquarters at the Times Tower building in Nairobi. FILE PHOTO | NMG
Kenya Revenue Authority headquarters at the Times Tower building in Nairobi. FILE PHOTO | NMG 

Beverage manufacturer Coca-Cola is fighting to stop the taxman from recovering Sh516 million paid as fees for marketing and branding services.

Coca-Cola Central East and West Africa Limited, a local subsidiary of the giant soft drinks manufacturer, says the promotional services it provided were done on behalf of its American parent firm, hence fall under zero-rated export services.

The soft drinks giant insists that the local bottling companies and soft drinks consumers do not benefit from its promotional services.

It argues that being American, its parent firm derived benefit from the services outside Kenya’s borders hence the VAT demand by the taxman is illegal.

The firm adds that the sale of soft drinks is done by independent bottling companies which run their own separate promotional campaigns.

Coca Cola Central, East and West Africa Limited had objected to the KRA demand at the VAT Appeals Tribunal, which ruled in favour of the taxman in 2012.

The Kenya Revenue Authority when slapping Coca Cola Central, East and West Africa Ltd with the demand for Sh516 million argued that some of the marketing services provided by the firm are consumed locally hence should be treated as services consumed in Kenya.

The taxman is, however, yet to respond to the High Court suit filed by Coca Cola.

Justice Louis Onguto has ordered the KRA to respond to the suit by September 20 when he will mention the case.

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