KBL Secures Major Victory in Sh486 Million Tax Dispute with KRA

 


Kenya Breweries Limited (KBL) has successfully overturned a Sh486 million tax demand by the Kenya Revenue Authority (KRA) following a four-year legal battle. The Tax Appeals Tribunal ruled in favour of KBL on March 21, 2025, finding that the tax assessment was incorrect and excessive. The dispute stemmed from KRA’s classification of fermented apple fruit concentrate, a raw material used in producing KBL’s Tusker Cider, as a finished alcoholic beverage subject to higher import duties.

The tribunal determined that KBL had provided sufficient evidence to prove that the concentrate was a raw material, not a finished product, and was therefore eligible for excise duty relief. This ruling aligns with previous decisions, including a 2022 High Court judgment affirming the tribunal’s classification of apple concentrate under tariff code 2106.90.20, which attracts a lower duty rate of 10%.

Key Highlights of the Case

  • Dispute Origin: KRA issued a tax assessment in March 2021, demanding Sh668 million in excise duty and VAT. This was later revised to Sh486 million after KBL’s objection.
  • KBL’s Argument: The brewery contended that its excise duty rebates were legitimate, supported by proper export documentation, and that the apple cider concentrate was a raw material, not a finished product.
  • KRA’s Position: KRA argued that KBL failed to provide adequate proof of exports and maintained that the concentrate was a finished product, subject to higher excise duty.
  • Tribunal’s Decision: The tribunal found that KBL had discharged its burden of proof and criticized KRA for disregarding corrected documentation.

Implications for Tax Disputes

This ruling marks another significant victory for KBL in its ongoing tax disputes with KRA. It underscores the importance of accurate documentation and adherence to statutory requirements in tax assessments. The decision may also prompt a review of tax classification criteria and enforcement practices, potentially influencing future interactions between businesses and tax authorities.

Previous Legal Wins for KBL

  • June 2023: The Tax Appeal Tribunal ruled in favour of KBL regarding the classification of "apple plus" products, leading to the cancellation of a Sh182.9 million tax demand.
  • August 2023: KBL successfully appealed against a tax assessment related to the classification of "apple plus" under a specific import entry, resulting in the annulment of the tax demand.
Conclusion

KBL’s recent victory highlights the critical role of legal advocacy in resolving complex tax disputes. As businesses navigate evolving tax regulations, this case serves as a reminder of the importance of meticulous record-keeping and strategic legal representation.

 Book a Free consultancy with us here

Visit our website 

Follow our pages Facebook , Twitter, Linked In , Instagram , TikTok, Whatsapp Channel

Contact Us:

Email: info@rwkafrica.com
Phone: +254 728897429
Website: www.rwkafrica.com


Comments

Post a Comment

Popular posts from this blog

Key Changes to NSSF Contributions

Image
  As of February 1, 2025, significant changes to the National Social Security Fund (NSSF) contributions will take effect, impacting salaried Kenyans and their take-home pay. Here’s a detailed overview of these changes and their implications for taxpayers.
Read more

Understanding Advance Tax: Essential Information for Vehicle Owners.

Image
  Welcome to the latest edition of the RWK & ASSOCIATES CPA(K) Newsletter. In this issue, we focus on Advance Tax , a critical requirement for all commercial and public service vehicle owners. Understanding how this tax operates and how to manage it effectively can save you time and avoid unnecessary complications. Advance Tax is a mandatory prepayment needed before a commercial or public service vehicle can be registered or licensed. The tax amount is determined by the vehicle's type and capacity. For example, vans, pick-ups, trucks, and similar vehicles incur a fee of Kshs. 2,500 per ton of load capacity or kshs 5000 whichever is higher. In contrast, saloons, station wagons, mini-buses, buses, and coaches are charged Kshs. 100 per passenger capacity per month or kshs 5000 annual amount whichever is higher. It is important to note that Advance Tax is not a final tax. Taxpayers must report this payment in their annual income tax returns and settle any additional taxes that ...
Read more

Clarification On Taxation Of Meals Provided By Employers

Image
Background:  The Kenya Revenue Authority (KRA) issued a Technical Circular (Ref: 1005/1) in March 2017, outlining guidelines for the taxation of employment income, particularly regarding benefits provided to employees. Among these benefits, the circular stated that meals provided to employees up to a value of Kshs. 48,000 per year per employee were not subject to tax, in accordance with Section 5(4)(f) of the Income Tax Act. Clarification:  Recently, there has been confusion regarding the interpretation and application of this provision. The KRA has clarified that if an employer provides meals exceeding the value of Kshs. 48,000 per annum per employee, the entire value of the meal becomes taxable income for the employee. Essentially, any amount spent on meals beyond the specified limit is now subject to taxation under the Income Tax Act. Implications for Employers: This clarification places the responsibility on employers to ensure compliance with tax regulations regarding emp...
Read more