The court supports KRA in Kshs. 517M tariff requirements from tobacco company – KBC


The Kenya Revenue Authority (KRA) has been set up to collect taxes of Kshs. 517.8 million from Mastermind Tobacco Limited following the decision of the Tax Appeal Court.

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The decision stems from an appeal filed by a tobacco company in 2016 against the KRA’s decision to demand a levy from the sale of cigarettes.

In a letter dated 26 March 2018, KRA assessed Mastermind Tobacco Limited for Value Added Tax (VAT) of Kshs. 90.2 Million and Duty Tax of Kshs. 427.5 million because of the sale of cigarettes which was divided as exports and therefore zero was rated but taxpayers failed to provide proof of shipment of goods.

Courage Tobacco challenged the KRA results and led the revenue authority to issue an Opposition Decision on 22nd May 2018.

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Disappointed by the Commissioner’s decision to confirm the assessment, the company appealed to the Tax Appeal Court.

The Tax Court confirmed the authority’s position on the assessment in its decision issued on 23 April 2021.

To reach its discovery, the Court held that Mastermind had failed to discharge its burden of proof that it was indeed shipping the shipment of cigarettes involved.

The Court found that product shipping is a process that required Mastermind Tobacco to provide evidence of documents obtained and submitted at each stage of the process; from the country of origin, to the state of transportation and finally to the country of destination.

In maintaining the taxpayer’s decision to assess the tax for lack of export certification, the Court found that the KRA has been empowered under the EACCMA rule to request the manufacture of all documents used in each step of the export process.

The court further found that the request of the export authority was not reasonable, fair or infringement of the company’s rights under Article 47 of the Constitution of Kenya, 2010.

KRA will now continue to collect eligible levies from Mastermind Tobacco.

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