Supreme Court to hear Sh5.6bn Coca-Cola tax dispute

id : 108 Dispute Resolution   
posted by : Admin
 DOQ : 2020-11-24 12:09:17

The Kenya Revenue Authority (KRA) on Monday suffered a blow after the High Court sitting in Nairobi allowed an appeal lodged by CocaCola Central East and West Africa Limited contesting a ruling issued by the Tax Appeals Tribunal (TAT) in 2013 that okayed the taxman’s intention to collect Ksh516 billion from the appellant.

The issue for determination in the appeal was whether marketing services provided by the appellant to Coca Cola Export, a company located outside Kenya amounted to exported services and thus chargeable to Value Added Tax (VAT) at the rate of zero percent.

Since 2013, KRA has relied on the CocaCola case as decided by TAT as a precedent in assessing and issuing tax decisions regarding VAT on exported services.

In its ruling on Monday, the High Court relied on the Organisation for Economic Cooperation and Development (OECD) guidelines on cross-border supply of services and overturned the holding that the consumers of the appellant’s services are the households within Kenya that purchase the products being advertised.

Further, the court went on to find that the contractual arrangement between the appellant and its non-resident
related company was not a scheme to avoid paying tax.

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