The Kenya Revenue Authority(KRA) will now collect KSh 517 Million in unpaid taxes from Mastermind Tobacco Kenya Limited following a decision by the Tax Appeals Tribunal.
According to market research company Euromonitor International, Mastermind Tobacco Kenya focuses on marketing to rural and peri-urban consumers for its mid-priced and economy brands.
The firm’s most popular brands include Rocket, Ralli and its flagship brand, Supermatch.
KRA decision was disputed by Mastermind
An appeal filed by the tobacco firm five years ago against a decision by KRA to demand taxes from cigarette sales has been dismissed by the Tribunal, opening the door for the taxman to go after this firm.
In a letter dated 26th March 2018, KRA assessed Mastermind Tobacco Limited for Value Added Tax (VAT) of KSh 90.2 Million and Excise Duty of KSh 427.5 Million.
The tobacco maker failed to provide proof of exports for the consignments classified as exports and hence zero-rated.
Mastermind Tobacco subsequently disputed these findings, prompting the Authority to issue an Objection Decision on 22nd May 2018.
Aggrieved by the decision of the KRA Commissioner to confirm the assessment, Mastermind took its case to the Tax Appeals Tribunal.
The Tax Tribunal affirmed the Authority’s position on the assessment in its judgment delivered on 23rd April 2021.
The Tribunal held that Mastermind failed to discharge its burden of proof that it exported the cigarette consignment in question.
The Tribunal noted that the exportation of goods is a process that required Mastermind Tobacco to produce evidence of documents acquired and presented at every stage of the process, from the country of origin to the transit state and finally at the country of destination.
The Tribunal found that KRA is empowered under the EACCMA regime to request the production of all the documents used at every stage of the export process.
It further found that the Authority’s request for the production of export documents was neither unreasonable, unfair, nor a violation of the company’s rights under Article 47 of the Constitution of Kenya, 2010.
Mastermind Tobacco Kenya was established by ex‐British American Tobacco (BAT) Kenya Director Wilfred Murungi and incorporated in 1987.
Murungi, owner and Chairman of Mastermind Tobacco Kenya, died in June 2019.
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