Nairobi Bottlers Limited, Mount Kenya Bottlers Limited, Rift Valley Bottlers Limited and Kisii Bottlers Limited will be going to the Court of Appeal to challenge a High Court ruling that allowed Kenya Revenue Authority (KRA) to demand taxes worth KES 5 Billion on sale of returnable bottles. Going by the assessments done by the KRA in 2009, the returnable glass soda bottles are subject to tax. KRA conducted an audit that shows that the bottlers did not submit axes from the sale of returnable bottles between 2006 to 2009, thus accumulating KES 5,620,730,161 worth of tax arrears, penalties and interests.
The Sunday Nation reports that in court, the bottling companies claimed that the items should not be taxed because they are never sold to consumers. KRA on their side maintained that the bottles were sold to distributors alongside their contents and that proceeds from the sale of returnable containers were also taxable. The four bottling companies filed a petition at the High Court to challenge KES 5 billion tax assessments that KRA subjected to them for the period between 2006 to 2009. The companies sought a declaration that the assessments were unconstitutional and violated their rights.
According to tax experts, Deloitte, the consumer will have to bear the tax burden if the bottlers lose the court case since they will have to transfer part of the burden to the consumer. Now that, might just see your glass bottled soda price go up by a few shillings.