Taxman shocks KBL with fresh Sh8 billion demand

Kenya Breweries Limited’s beer canning line at the Ruaraka plant in Nairobi. FILE PHOTO | NMG

Kenya Revenue Authority (KRA) has shocked beer maker Kenya Breweries Ltd (KBL) with a tax demand of Sh8.2 billion it waived two years ago after years of negotiations.

The beer company says in a petition before the High Court that the demand by the KRA is prejudicial because the taxman made the company withdraw a case it had filed before the tax appeals tribunal, challenging the excise duty and value-added tax from June 2015 to March 2017.

The brewer says in the deal, which was reached after exploring alternative dispute resolution, the State abandoned Sh11.16 billion if KBL paid Sh3.5 billion and withdrew the case.

Court papers stated that KBL applied for abandonment of taxes as per Section 37 of the Tax Procedures Act, which was approved in a letter on January 22, 2021, and the company wired Sh3.5 billion on January 25.

“The withdrawal of the appeals was in the belief that the tax issues had been fully settled and that the appeals were spent upon payment of the KES 3.5 billion,” the company said through senior counsel Kamau Karori.

Justice Mugure Thande certified the case as urgent and granted the order suspending KRA’s demand. The case will be mentioned on June 6 for directions.

The beer maker says KRA sent a letter reversing its decision to abandon the taxes on April 25. The demand required KBL to pay the amount within seven days.

The KRA has employed aggressive methods to meet revenue collection targets.

The taxman missed its targets by Sh27 billion in the three months to December amid a directive by President William Ruto to “collect every shilling due” regardless of the powers wielded by persons or companies from whom payment is due.

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