The Keroche Breweries Ltd has announced that it is moving to the High Court to challenge a decision by the Tax Appeals Tribunal (TAT) concerning the dispute between them and the Kenya Revenue Authority (KRA).
Earlier today, TAT dismissed six cases filed by Keroche clearing the way for KRA to collect tax amounting to Ksh9,116,835,985 from the company.
Three appeals were related to Viena Ice Vodka, while the three others on the pineapple-based wines.
In a statement, Keroche announced its dissatisfaction with the Tribunal’s decision, saying that it would head to the High Court.
“The dispute process is yet to be concluded. In any case we as Keroche Breweries are dissatisfied with the decisions arrived at by the Tax Dispute Tribunal. As indicated, we will now formally go to court and use our right to a fair hearing. The decision by the TAT refusing to recognize that our innovation to dilute our vodka with distilled water for moderate drinking should not be subjected to punitive taxation,” the statement read in part.
In the case, KRA was demanding taxes for the Vienna Ice Brand of Vodka, which Keroche argued that was not manufactured, but made by diluting the Crescent Vodka.
KRA argued that the process amounted to compounding of denatured spirits, which is taxable.
“The decision is retrogressive, anti-entrepreneurship and stifles much needed innovations without which the cause of Kenyan industrialization is hurt. This means that all water added to our vodka to make a ready to drink vodka and consumed to date -backdated for last eight years – now attracts KSh243.00 per litre. The decision to tax the water added to our vodka at the above rate makes this the most expensive water in the world,” added the statement.
“As provided for within the law, Keroche Breweries will challenge both decisions at the High Court and if need be in the Court of Appeal,” the company said.
The battle between Keroche Breweries and KRA has been on since 2014, with KRA accepting that there was confusion in the taxation rate seven years later.
The company claims that it has been paying taxes for the Crescent Vodka, which is what is in the 500ml Viena Ice Ready-to-Drink Vodka.
“We have never charged nor collected any tax on the 312ml naturally distilled water added in the 500ml Viena ready to drink Vodka,” says the company.
Keroche also faults the tribunal for allowing KRA to appeal the 2006 ruling that dismissed their Ksh1.2 billion tax claim against them.
Three years ago, the company won a ten-year-old battle against KRA after a bench of three judges quashed a demand for assessments on income tax, excise duty and withholding tax amounting to Ksh800 million.