KENYA – The taxman is demanding approximately Sh1 billion from Keroche Breweries, which it accuses of remitting lower-than-required excise duty on one of its low-end alcoholic drinks in the past one year.
Kenya Revenue Authority (KRA) claims Keroche ought to have been paying excise duty of Sh101.2 per litre on its Viena Ice Ready-to-Drink Vodka and has sent the beer maker a backdated demand letter inclusive of penalties.
Keroche disputes this calculation saying the particular drink, which it produces by diluting another brand Crescent Vodka, should be taxed at the rate of Sh26.4 per litre.
“In a 500ml bottle of Viena Ice, you have 188ml Crescent Vodka attracting Sh13.2 excise duty and 312ml of water which should attract zero excise,” Tabitha Karanja, the chief executive officer of Keroche, notes in a May 15, 2015 letter to KRA.
“We dispute the fact that addition of water would generate an additional excise duty of Sh37.4. The computation by KRA would see the drink retail at Sh190 instead of the prevailing Sh90, automatically pushing it out of the market.”
KRA has consistently disputed this argument since it initial contact with Keroche on the matter in June 2014, insisting that Viena Ice attracts Sh101.2 tax per litre like other brands with alcohol content of 15 per cent and above.
The taxman’s last response to Keroche in 2014 happened in August where it stood by its calculation. KRA did not, however, indicate how much the brewer allegedly owed it at the time.
KRA wrote to the brewer in April 2015, indicating that its position had not changed since last year and also including a detailed calculation of how much the brewer needs to pay immediately.
The amount at the time was calculated for the nine months to February and it amounted to Sh787 million.