Just a day after Keroche Breweries opened its doors after a court order, the war with the Kenya Revenue Authority is far from over.
The tax man is demanding approximately Sh1 billion from Keroche Breweries, which it accuses of paying less than the required excise duty on one of its low-end alcoholic drinks in the past one year.
Kenya Revenue Authority (KRA) claims that 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.
In its response, Keroche has however disputed this calculation saying the particular drink, which it produces by diluting another brand Crescent Vodka, should be taxed at a lower rate of Sh26.4 per litre.
“In a 500 ml bottle of Viena Ice, you have 188 ml Crescent Vodka attracting Sh13.2 excise duty and 312 ml of water which should attract zero excise,” Tabitha Karanja, the chief executive officer of Keroche, notes in letter that she wrote to KRA.
“It’s so unfair to imagine that addition of water would generate an additional exercise duty of Sh37.4. According to their calculation it means that the drink should be retailing at over two times the price at which it is retaining this means that KRA is simply trying to push the drink out of the market ” she adds
On its side KRA has consistently disputed this argument since it initial contact with Keroche on the matter in June 2014, insisting that Viena Ice attracts Sh 101.2 tax per litre like other brands with alcohol content of 15 per cent and above.