Keroche Breweries to challenge ruling ordering it to pay KRA Ksh.9B in taxes

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Keroche Breweries Limited has  vowed to challenge a decision by the Tax Appeals Tribunal ordering them to pay the Kenya Revenue Authority (KRA) over Ksh.9 billion in taxes.

In a statement issued on Wednesday, the brewer said it will challenge the decision that it pays the authority a total of Ksh.9,116,835,985 at the High Court and, if need be, the Court of Appeal.

Keroche argued that Viena Ice vodka was not a distinct product from Crescent vodka since it (Viena Ice) was produced by diluting Crescent vodka, hence the process did not amount to manufacture.

“Mixing vodka and water does not result in the creation of a new product. Excise Duty, is, therefore, only payable when a new good is manufactured in Kenya,” said the brewer.

KRA however stated that the process undertaken by Keroche amounts to manufacture as is illustrated in the Compounding of Denatured Spirits Act Cap 123 as well as the Customs & Excise Act, CAP 472 (now repealed).

In the second appeal, the brewer argued that what they produced was fortified wines which should be classified under HS Code 22.04 thereby attracting an excise duty rate of 40%.

The Tribunal, in a ruling delivered on Monday, said: “Keroche Breweries Limited was involved in the compounding of spirit which amounts to manufacture within the meaning in Excise Duty Act, 2015 and Customs and Excise Act, CAP 472 (repealed)as such Viena Ice was a distinct product for which Excise Duty was payable.”