The Kenya Revenue Authority has detained consignments of Jameson Irish Whisky in a dispute with Pernod Ricard Kenya Limited over the customs value used to calculate tax.
The tax agency is seeking about Sh700 million from the distributor and marketer of Jameson, while the company is asking the court to order the release of its goods.
According to the dispute, KRA wants the importer to revise the customs price of the whisky for tax purposes. Pernod Ricard Kenya has rejected that position and taken the matter to the Tax Tribunal.
KRA issued a demand notice in January for Sh697 million covering imports between July 2012 and December 2016. The authority says an audit found that the company had significantly under-declared the value of its imports.
After KRA detained a shipment of Jameson, Pernod Ricard Kenya moved to the High Court arguing that it should be allowed to keep trading while its appeal is heard. The company says the continued detention of the cargo is hurting its business.
The firm says it is paying heavy warehouse charges and is running low on stock for customers. It also says it had provided a bank guarantee, but KRA still did not release the consignment.
KRA has opposed the application. It says the company benefited from being the only dealer, which made it difficult to compare transaction values with other market players.
The authority further argues that independent dealer comparisons showed that Pernod Ricard Kenya had suppressed the customs value of its products. It also says the company’s earlier undertaking to secure customs revenue was rejected because it was not a lawful mechanism.
KRA maintains that the company can pay tax based on the uplifted value and later seek a refund if the tribunal rules in its favour. The authority says failing to collect the tax would hurt public service delivery.
On July 3, KRA had agreed to release four consignments while the court case was pending, but the arrangement did not go through, prompting a fresh application from Pernod Ricard Kenya.
