Keroche Breweries will be forced to pay a Sh 9.1 billion tax bill after losing a contracted and bitter dispute with the Kenya Revenue Authority.
This is a huge blow to the Naivasha-based brewery which was counting on the tribunal to save it from the tax demand by Kenya Revenue Authority (KRA).
KRA won all six appeals filed by Keroche before the Tax Appeals Tribunal in 2015 and 2017 respectively.
“KRA relied on the Compounding of Denatured Spirits Act Cap 123 and argued that the process undertaken by Keroche Breweries was compounding within the meaning of the Act,” KRA said in statement.
“Compounding of spirits also amounted to manufacture of a new product within the definition of Customs & Excise Act, CAP 472 (now repealed).”
KRA’s position was that HS code 22.04 was reserved for wines based on grapes and Keroche’s fortified wine was purely fermented pineapple and as such, it is to be classified under HS Code 22.06 which is for any other fermented beverage.
The tax tribunal, however, faulted KRA for levying interest and late payment penalties for the period the disputes were being litigated at the High Court and the Court of Appeal, which had directed that the matters be heard at the Tax Appeals Tribunal.
