Coca-Cola wins Ksh5.6bn court case against KRA

Coca Cola

By Edna Mwende,

Soft drinks manufacturer Coca Cola has won a case court against the Kenya Revenue Authority (KRA) which had moved to the High Court seeking compensation from the beverage company for alleged tax evasion.

KRA moved to court seeking tax arrears in the amount of Ksh. 5.6 billion from the soft drinks maker for failing to remit tax on returnable containers such as bottles and crates every time that they are refilled. KRA sought the Ksh. 5.6 billion from Mount Kenya Bottlers Ltd, Rift Valley Bottlers, Nairobi Bottlers and Kisii Bottlers.

In its defense Coca Cola argued that the bottles are only used for packing and distributing beverages and as such the soft drinks manufacturer should be exempted from tax because it does not manufacture the containers.

The suit was however dismissed by High Court Judges Wanjiru Karanja, Otieno Odek and Kantai Ole Sankale who insisted that multiple taxation was unlawful putting an end to the law suit that was initially taken to court in 2009.

“In our view, the exclusion of returnable containers from the ex-factory selling price as per the previous legislation must have appreciated the unique nature of the practice in the industry and the dealing in such containers,” said Justices Wanjiru Karanja, Otieno Odek and Kantai ole Sankale said in official court documents.

According to a news report by the Business Daily, KRA came to the conclusion that Coca Cola was not remitting taxes for returnable containers after conducting audits on the soft drinks manufacturers for the period between 2006 and 2008. The taxman would later determine the number of products the bottlers sold in the period which in turn made known the number of returnable containers used by the bottler in the two years. KRA would later multiply the same by the deposits the bottler’s customers paid on the said containers before arriving at the Ksh. 5.6 billion figure.

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