The taxman is demanding Sh700 million arrears from Pernod Ricard Kenya Limited, the distributor and marketer of Jameson, who has moved to court seeking the release of its products.
KRA wants the importer to adjust the custom price of the goods for purposes of tax computation but Pernod Ricard Kenya has objected to the demand and filed an appeal with the Tax Tribunal.
KRA in January sent Pernod Ricard Kenya a demand notice for Sh697 million covering the period between July 2012 and December 2016 on grounds that an audit had revealed massive under-declaration of the value of its imports.
Pernod Ricard moved to the High Court after KRA detained a consignment of Jameson imports. The firm argues that it should be allowed to continue in business pending a determination of its appeal before the Tribunal on the same matter.
KRA had on July 3 agreed to release the four consignments pending determination of the court case.
But the deal never materialised causing Pernod Ricard to file a fresh application accusing KRA of refusing to release the consignment even after the importer provided a bank guarantee.
The firm argues that it continues to incur heavy warehouse charges and is running out of supplies to service its customers.
KRA has opposed the application noting that the firm had enjoyed restrictive benefits of being the only dealer, making it difficult to compare transactional values.
The taxman argues that after assessing the transactional value by independent dealers in the market, it was established that Pernod Ricard had suppressed the custom value of its products.
KRA says the firm’s undertaking to secure customs revenue prior to the consent of July 3 was rejected since it was not one of the mechanisms anchored in law.
The taxman says Pernod Ricard has an option to pay the tax based on the uplifted value and apply for a refund in future in the event a decision is made in its favour.
But on the other hand KRA says not collecting tax will prejudice the public by hampering service delivery by the government.
