High Court Orders KRA to Refund Pernod Ricard Kenya Sh29.4 Million in Tax Dispute

The High Court has ordered the Kenya Revenue Authority (KRA) to refund Pernod Ricard Kenya Sh29.4 million after finding that the tax authority failed to determine the company’s refund application within the statutory period required by law.

In its ruling, the court dismissed KRA’s appeal against a decision by the Tax Appeals Tribunal, which had found that the authority’s delayed response effectively validated the liquor firm’s refund claim under the Tax Procedures Act.

The dispute arose after Pernod Ricard Kenya, a subsidiary of global wines and spirits manufacturer Pernod Ricard, applied for tax refunds on December 6, 2022.

The company sought refunds for overpaid taxes covering different periods, including Sh25.9 million for the period between July 2019 and June 2020 and Sh3.4 million for the period between July 2020 and June 2021.

Under Section 47 of the Tax Procedures Act, the Commissioner for Domestic Taxes is required to determine a tax refund application within 90 days of receiving it.

Pernod Ricard Kenya argued that KRA failed to comply with the legal deadline. The company, whose brands include Jameson, Absolut, Chivas Regal, Martell and Ballantine’s, maintained that although KRA eventually rejected the applications, the decision was dated April 6, 2023, and communicated on May 23, 2023, well after the statutory deadline had expired.

“The tribunal correctly held that the refund was deemed allowed by operation of law,” the company argued during the proceedings.

KRA challenged the tribunal’s findings and sought to overturn its judgment delivered on June 7, 2024.

The tax authority maintained that it had acted within the prescribed period, arguing that it communicated its position on March 1, 2023, through an email sent to Pernod Ricard Kenya’s tax agent, PricewaterhouseCoopers (PwC). KRA said it had informed the company that outstanding tax liabilities needed to be resolved before any refund could be processed.

However, the High Court upheld the tribunal’s findings, noting that there was no evidence before the tribunal to prove that the alleged March 1 communication had been made.

The court consequently found that KRA had failed to determine the refund application within the timeframe prescribed by law, allowing the refund claim to stand.