KBL is Appalled by Taxman’s New Sh8 billion Demand

After years of negotiations, the Kenya Revenue Authority (KRA) shocked beer manufacturer Kenya Breweries Ltd (KBL) with a tax demand of Sh8.2 billion that it waived two years ago.

In a petition to the High Court, the beer company claims that the KRA’s demand is unfair because the taxman forced the company to withdraw a tax appeals tribunal case it had brought against excise duty and value-added tax from June 2015 to March 2017.

The brewer claims that the State gave up Sh11.16 billion as part of the agreement, which was reached after looking into alternative dispute resolution, if KBL paid Sh3.5 billion and dropped the lawsuit.

According to court documents, KBL requested to have its taxes abandoned in accordance with Section 37 of the Tax Procedures Act. This request was approved in a letter dated January 22, 2021, and on January 25, the company wired Sh3.5 billion.

“The withdrawal of the appeals was in the belief that the tax issues had been fully settled and that the appeals were spent upon payment of the KES 3.5 billion,” the company said through senior counsel Kamau Karori.

Justice Mugure Thande granted the order suspending KRA’s demand after certifying the case as urgent. On June 6, the case will be brought up for guidance.

The brewer claims that on April 25, KRA sent a letter retracting its decision to abandon the taxes. KBL had seven days to comply with the demand and pay the money.

To reach its revenue collection goals, the KRA has used aggressive tactics.

The taxman fell short of its goals by Sh27 billion in the three months leading up to December despite President William Ruto’s order to “collect every shilling due” regardless of the authority held by individuals or businesses who owe money.