The Kenya Revenue Authority (KRA) has been blocked from reopening tax assessment files older than five years without some solid evidence of dishonesty, by the Tax Appeals Tribunal – and it’ll have a big impact on a Sh34.2 million dispute involving Almasi – a Coca-Cola bottler.
The Rules on Tax Audits
The tribunal made it pretty clear in its ruling that KRA can’t start demanding records or trying to collect back taxes after five years have passed, unless they can prove that the taxpayer has been playing foul – or tried to deliberately avoid paying tax.
At the same time, the tribunal is basically saying that the taxman’s authority to enforce new excise rates is still intact, as long as everything is above board and by the book, of course.
The Background
This all started back in 2025 when KRA came knocking on Almasi’s door – literally, as they conducted a physical stock check at the Nyeri and Eldoret plants. This led to them issuing a new assessment for extra duty. Almasi isn’t too happy about this – they think KRA got it wrong.
Almasi, which is a bit of a big deal in the beverage world as it’s a affiliate of the Coca-Cola group, tried to appeal the decision but KRA stuck with it. Almasi argued that KRA was using the wrong rates – ones that had been suspended by the High Court because of a dispute over the new rates.
The Records Fiasco
Almasi is also fighting over the fact that KRA were looking at records from back in 2018 and 2019. They say that should be off-limits as those records are too old and the taxman can’t use them to get more money from them.
Mixed Ruling – Sort Of
So it looks like the tribunal agreed with Almasi on one thing – KRA did overstep the mark when they looked at old records without a good reason to do so. “It’s as clear as day that you can’t look back further than five years – and the taxpayer only has to keep records for that long too,” the tribunal said.
Making a New Rule
The tribunal added: “Any assessments or records demanded for the years 2018 and 2019 related to adjustments and sales were unlawful and statute-barred unless fraud, wilful neglect, or tax evasion was pleaded and proved.”
The tribunal added that if KRA wanted to look at older records (in this case 2018 and 2019), they would have had to prove that the taxpayer was up to no good – like they’d tried to cheat on their taxes.
But as there was no evidence of any of that, the tribunal told KRA to scrap the assessments that were based on those old records. They also told KRA to keep the assessments that were based on more recent records (from March 2020 onwards) – and to sort this whole thing out properly within the next 30 days.
How This All Began
All of this started because KRA did an audit and found out Almasi had adjusted its production figures to match the new higher rates that were temporarily suspended by the High Court. They argued this was a huge discrepancy – of over 3 million litres to be exact – and that’s why they issued this new assessment.
But Almasi said they had to do this to make sure they paid the right duty – and that the man in the street is still only paying the suspended rates (for now). Before the hearing, they managed to sort some of this out through an alternative dispute resolution (ADR) process – so now it’s down to just the Sh25 million bit of the original Sh34.2 million that they need to sort out.
Documentation Requirements
The tribunal also faulted Almasi for failing to present key supporting documents to KRA during the objection stage, ruling that taxpayers cannot rely on evidence first introduced during appeal proceedings. “The appellant has engaged in mere assertions in this appeal without providing evidence,” the tribunal stated, emphasizing that “a mere statement in pleadings is not evidence.”