The Kenya Revenue Authority is seeking about Ksh1 billion from Keroche Breweries to recover unpaid taxes. KRA accuses the beer firm of remitting lower-than-required excise duty on one of its low-end alcoholic drinks in the past one year, Business Daily reports, but the compay said the taxman is seeking to tax the water it uses in the drink.
Kenya Revenue Authority (KRA) claims Keroche should have paid excise duty of Ksh101.2 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, arguing tha the drink, which it produces by diluting another brand Crescent Vodka, should be taxed at the rate of Ksh26.4 per litre.
SEE ALSO: COURT STOPS KRA FROM CLOSING KEROCHE
“In a 500ml bottle of Viena Ice, you have 188ml Crescent Vodka attracting Ksh13.2 excise duty and 312ml of water which should attract zero excise,” Ms 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 Ksh37.4. The computation by KRA would see the drink retail at Ksh190 instead of the prevailing Ksh90, 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 Ksh101.2 tax per litre like other brands with alcohol content of 15% and above.
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