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VAT ON RETURNABLE CONTAINERS

Yet in another case the chief tax collector has won the first leg of a legal battle challenging a decision denying it Sh5.6 billion in tax arrears.

The Supreme Court has accepted to hear an appeal by Kenya Revenue Authority.

KRA is challenging an appeal decision in favour of Coca-Cola relating to levying of tax on returnable containers.

In their August 4 decision, Supreme Court judges David Maraga, Mohammed Ibrahim, Smokin Wanjala and Philomena Mwilu held that they have jurisdiction to entertain the matter.

"....we find that this court has jurisdiction in respect of this appeal. Having so found, we have no option but to dismiss the preliminary objection,"

MARKETING SERVICES

In 2013, KRA audited the appellant and raised issuesg with the company’s marketing activities.

KRA went ahead and demand Ksh 516,075,552 being alleged underdeclared VAT on services supplied by the appellant. The appellant questioned KRA’s decision and lodged an appeal at the TaT

The appellant argued that the marketing and promotional services rendered by it were services rendered to Coca Cola Export, a company based in the United States of America (USA), hence comprised exported services.

According to the appellant, such services were taxable at the rate of zero percent for VAT purposes in Kenya as opposed to the standard rate,16%, as alleged by KRA.

However, the Tribunal in disallowing the appeal held the view that the persons locat

ed in Kenya who viewed or listened to advertisement and marketing campaigns ran by the appellant were the recipients.

The appellant then moved to the High Court after being dissatisfied with the ruling issued by TaT in November 2013.