KENYA – Kenya Breweries Limited (KBL), a subsidiary of East African Breweries Limited (EABL), is embroiled in a Kes12.037 billion (US$82.27M) tax dispute with the Kenya Revenue Authority (KRA).
The majority of the outstanding amount, Kes8.2 billion (US$58.78M), stems from a tax remission granted under the previous administration that was later revoked by KRA.
According to documents presented to the Senate Trade committee by KRA Commissioner-General Humphrey Wattanga, KBL owed the taxman the aforementioned amount at the end of the 2022/23 financial year.
This figure breaks down into two parts: Kes8.2 billion (US$58.78M) related to a tax assessment on a previously granted remission of Kes11.7 billion (US$58.78M) on Keg beer, and an additional Kes3.83 billion (US$27.46M) outstanding since July 2015.
“The Kes8.2B (US$58.78M) was abandoned, however, abandonment was revoked, and the matter is pending determination at the High Court,” Mr. Wattanga explained.
KBL had initially paid Kes3.5 billion (US$25M) between 2015 and 2016 towards the Kes11.7 billion (US$83.87) tax. However, the tax abandonment was revoked, leading to the current dispute.
The Kes3.83 billion (US$27.46M) outstanding since 2015 is currently under appeal at the Tax Appeals Tribunal (TAT) and is also undergoing an alternative dispute resolution (ADR) process.
It is important to note that tax abandonment, as outlined in Section 37 of the Tax Procedure Act, can only be initiated and approved by the KRA Commissioner-General with the subsequent endorsement of the Treasury Cabinet Secretary.
This ongoing tax dispute comes amid a challenging economic environment for EABL, KBL’s parent company. The company recently reported a 22 percent decline in its half-year net profit for the period ending December 2023, attributing this primarily to rising inflation and finance costs.
EABL continued to invest behind its brands with advertising and promotions spend rising 16.5 per cent to Kes6.1 billion (US$43.73M). The company’s Kes1.2 billion (US$8.6M) microbrewery in Kenya started producing during the half.
Recently, EABL launched the first-of-its-kind exclusive members club under its luxury brand, Johnnie Walker Blue Label. Dubbed The Blue Club, the initiative aims to catalyse connections that foster thought leadership across industries and drive innovation in the luxury space.
Blue Club members will enjoy exclusive benefits enabled through unique partnerships designed around Johnnie Walker Blue Label and tailored to their interests.
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