The Kenya Revenue Authority is set to collect Ksh 9 Billion in taxes from Keroche Breweries after winning six appeal cases by the firm.
The court case held before the Tax Appeals Tribunal saw appeals surrounding the manufacturing process of Vienna Ice Brand of Vodka. Keroche argued that it was made by diluting Crescent Vodka, a process that does not amount to manufacturing.
KRA, however, said that the process was compounding within the Compounding of Deenatured Spirits Act cap 123. Another appeal saw Keroche argue that the firm makes fortified wines which should be classified under HS Code 22.04 hence attracting a lower excise duty rate of 40%.
The taxman argued that the HS COde 22.04 was only reserved for wines based on grapes but Keroche’s fortified wine was purely fermented pineapple. This means that it is meant to be classified under HS Code 22.06 which attracts a higher excise duty rate of 60%.
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of spirit which amounts to manufacture within the meaning in Excise Duty Act, 2015 and Customs and Excise Act, CAP 472 (repealed)as such Vienna Ice was a distinct product for which Excise Duty was payable
With regard to Fortified wines produced by the Brewer, the Tribunal guided by the World Customs Organization explanatory notes on HS code found that HS code 22.04 was for grape based wines and the correct classification was HS code 22.06 as the Keroche’s wine is a mixture of fermented pineapple and alcohol.Tax Appeals Tribunal
Director of Public Prosecutions Noordin Haji ordered for the arrest of Keroche Breweries proprietors Tabitha Karanja and Joseph Karanja in August 2019 over allegations of Ksh 14 billion tax fraud.
This is after an audit by the Kenya Revenue Authority established that the firm had evaded tax totalling Ksh 14,451,836,375 between January 2015 and June 2019.
Tabitha accused the taxman of selective and unfair targeting, arguing that she has always followed the law and was shocked to be accused of tax evasion when the matters were still under a tax tribunal.
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