KRA vs Keroche: The Kenya Revenue Authority has frozen the bank accounts of Keroche Breweries. The freezing comes as the taxman moves to effect the collection of some Sh. 9 billion tax. The tax is being widely seen by Kenyans as a targeted move against the brewery.
On Thursday, Bizna Kenya reported that KRA was considering seizing the assets of the brewery.
“Today morning we woke up to an agency notice issued by KRA directed to our banks to collect Sh. 9 billion. This means Keroche Breweries can not withdraw any money or transact any business from their accounts until KRA collects the alleged Sh. 9 billion. In short, as we speak, they have halted all our operations. This injustice can not be allowed to stand. Our lawyers are currently in court to stay this KRA order,” said Tabitha Karanja, the founder and CEO of Keroche. “They know very well, the legal process in this matter has just begun. Immediately the tax appeals tribunal made the decision we have 30 days to appeal.”
According to the KRA Tax Investigations Handbook, the KRA Commissioner is empowered to hold as security an asset such as land or a building owned by a taxpayer who has defaulted in payment of tax. “This is done through placing caveats on subject properties and other assets owned by taxpayers and beneficiaries,” says the handbook.
In the same vein, a related report that appeared in a local daily says that KRA’s Investigations & Enforcement department has another unit dubbed Asset Recovery & Evidence Analysis which is expected to spring into action in case Keroche does not settle the tax bill.
KRA won six appeals filed by Keroche before the Tax Appeals Tribunal in 2015 and 2017 . In the three appeals before Tax Appeals Tribunal, the contention was in the manufacturing process of Vienna Ice Brand of Vodka.
The brewer argued that, Vienna Ice brand of Vodka was produced by diluting Crescent Vodka, a process that did not amount to manufacturing.
“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.
In the other appeal, on the classification of pineapple-based wines, Keroche had argued that what they produced were fortified wines which should be classified under HS Code 22.04 which attracted lower excise duty rate of 40 per cent.
KRA however said that HS code 22.04 was reserved for wines based on grapes and the 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. KRA vs Keroche.