Troubled Keroche breweries secured temporary orders stopping the taxman from recovering Sh9.1 billion in taxes from its accounts.
The Brewer had protested the move to freeze its accounts by Kenya Revenue Authority (KRA) over Sh9.1 billion tax demand.
KRA’s move followed a Tax Appeals Tribunal ruling on Thursday that dismissed Keroche’s applications challenging the levying of excise duty on an alcoholic drink produced at the brewer’s Naivasha factory.
Justice David Majanja’s orders have given Keroche temporary reprieve as it figures out its next move.
While the latest claim by KRA is for Sh9.1 billion, Keroche claims that the taxman has in the past few months made several demands for a cumulative Sh23 billion.
What started out as a Sh1.1 billion tax demand on November 29, 2006 has now grown nearly tenfold and threatens to ground Kenya’s largest indigenous brewery.
Keroche’s fate now lies with the court system, which has for nearly 15 years kept the taxman at bay.
At the heart of Keroche’s latest troubles is one of its most popular products, Vienna Ice vodka, which KRA wants taken off the list of fortified wine products, which enjoy some tax relief. Fortified wines have a distilled spirit added to them.
The taxman argues that the fortified wine products list is reserved for grape-based drinks, while Vienna Ice is made from fermented pineapples.
KRA told the Tax Appeals Tribunal that fermented beverages attract 60 per cent excise duty as opposed to fortified wines that attract 40 per cent of the same levy.
The tribunal ruled that Keroche’s Vienna Ice falls under fermented beverages, which gave KRA the green light to recover the unpaid levies.
Keroche’s suit, filed on Friday to challenge the taxman’s demands, is expected to reveal how the tax bill shot to Sh9.1 billion, although penalties and interest are likely to be some of the key reasons.
Last week, the tribunal questioned KRA’s move to levy interest and penalties on the tax demand while the two parties were seeking a resolution of the matter.
The beer maker has for years been fighting KRA’s attempts to delist Vienna Ice from the fortified wines products list at the tribunal.
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