The Tax Appeals Tribunal has overturned a Sh486million tax demand against Kenya Breweries Limited (KBL) by the Kenya Revenue Authority (KBL) for alleged assessment of the brewer’s excise duty and value-added tax (VAT).
The ruling has brought to an end a four-year legal battle between the KRA and the brewer over tax rebates, export documentation, and the classification of raw materials.
“Consequently, the tribunal finds and holds that the decision of the respondent...was incorrect and excessive because the appellant discharged its burden of burden of proof pursuant to the provisions of Section 56 (1) of the TPA (Tax Procedures Act) and Section 30 of the TATA (Tax Appeals Tribunal Act),” the tribunal said in its decision on March 21, 2025.
The tribunal added: “The upshot to the foregoing is that the tribunal finds and holds that the appeal is meritorious and makes the following orders: The appeal be and is hereby allowed.”
The dispute between KBL and KRA began from a tax assessment issued in March 2021, in which KRA demanded payment of Sh668 million in excise duty and value-added tax (VAT).
KBL objected to this assessment, prompting the taxman to revise the figures, and demanded Sh486,284,863 in unpaid taxes and penalties. KBL was unsatisfied with this decision and moved to appeal at the Tax Appeal Tribunal.
KBL objected to KRA’s assessment, arguing that the disallowed rebates were legitimate and had been correctly claimed under the Excise Duty Act.
The brewery said that it had exported excisable goods under customs control and was, therefore, entitled to tax relief. It further argued that the inconsistencies in its submissions had been rectified and that the required documentation had been provided to KRA.
On its part, KRA said that the discrepancies in KBL’s tax filings suggested that the company had under-declared its excise duty liability and that some of its claimed exports lacked proper supporting documents.
The brewery added that the imported apple cider concentrate was a raw material, not a finished product, and should have been eligible for excise duty relief. The brewery also told the tribunal that it had correctly declared and remitted VAT on its sales and that KRA’s assessment was unjustified.
Additionally, KBL challenged KRA’s classification of its imported apple cider concentrate, which the tax authority had deemed a finished product rather than a raw material, making it ineligible for excise duty rebates.
KRA defended its position, arguing that Kenya Breweries Limited had failed to meet the legal requirements for tax rebates.
The taxman maintained that the company had sought rebates on exports that were not registered in its name, a move that, in its view, pointed to possible under-declaration. It further argued that some of the export entries lacked the necessary certificates of export and landing, making it impossible to verify that the goods had indeed left the country.
On the classification of apple cider concentrate, KRA maintained that it was a finished product and, therefore, not subject to excise duty relief. It said that KBL had failed to demonstrate how it uses the apple cider concentrate as a raw material in the production of other excisable goods for it to qualify for excise duty relief.
While setting aside its earlier decision and agreeing with KBL, the tribunal found that the brewery had provided sufficient proof that the exports in question were eligible for tax relief. It criticized KRA for disregarding the corrected documentation.
“The Tribunal, having reviewed the schedules and other supporting documents notes and finds that the Respondent cannot decry the unavailability of documents but must instead review the documentary evidence that has been adduced as evidence by the Appellant and correct itself,” said the tribunal that is led by Christine Muga.
