Court throws out KRA’s Sh5.6b tax demand from Coca-Cola

Court throws out KRA's Sh5.6b tax demand from Coca-Cola

Coca-Cola had maintained that returnable containers used in packaging its drinks should not be subject to taxes The Supreme Court has thrown out Kenya Revenue Authority’s (KRA) Sh5.6 billion case against international soft drinks manufacturer, Coca-Cola company .

The five-judge bench has at the same time released a Sh2.6 billion guarantee that had been sitting in Centum Investment Ltd books as a liability to Coca-Cola.

Centum Investment made Sh2.6 billion from the sale of its stake in Coca-Cola’s subsidiaries – Almasi Beverages and Nairobi Bottlers to Coca-Cola Sabco East Africa.

Centum held 53.9 per cent of the issued shares of Almasi Beverages and 27.6 per cent in Nairobi Bottlers.

Centum’s total value in the two firms stood at Sh16.8 billion as of March 31, 2019. Coca-Cola Sabco East Africa paid Centum Sh19.4 billion, meaning the investment firm made Sh2.6 billion return on investment. Coca-Cola Sabco East Africa, which previously owned 72.4 per cent of the issued shares in Nairobi Bottlers, is now the sole shareholder of Nairobi Bottlers. Centum had set aside the money in the deal with Coca-Cola that it would shoulder part of the tax demand in the event that KRA won the case.

The Supreme Court bench comprising Chief Justice Martha Koome, her deputy Philomena Mwilu, Justices Mohamed Ibrahim, Njoki Ndung’u, and William Ouko threw out KRA’s application for failing to observe the court’s directions.

According to the judges, KRA’s application was not clear on its demands and had not attached essential parts of the petition filed in the High Court. They were of the view that it would be unfair to restart the case as it had been in the corridors of justice for 10 years.

“The dispute commenced in the High Court in October 2012, some 10 years ago, then moved to the Court of Appeal, over nine years ago in July 2013. To start the case all over again, for no fault of the respondents, is not only unconscionable but also insensitive and cruel,” the judges observed.

The case stems from a Sh 5.6 billion tax demand by KRA. It claimed that Coca-Cola had not paid its excise duty between 2006 and 2008 on returnable crates and empty soda bottles.

The soft drinks company had lost its case in the High Court after the lower court found that the taxman was within the law to demand the contested amount.

Coca-Cola contested the ruling at the Supreme Court.According to KRA, its audit revealed the […]

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