Blow to Taxman as Court Declares Minimum Tax Null and Void

akirimi | 2 years ago

Nairobi, September 20

The High Court sitting in Machakos has declared minimum tax provisions unconstitutional and the minimum tax guidelines null and void.

In a ruling, Justice George Odunga, issued an order restraining Kenya Revenue Authority (KRA) from enforcing the provisions of Section 12D of the Income Tax Act.

Three officials of the Kitengela Bar Owners Association, Stanley Waweru, Samwel Gitonga and Bernard Oranga, sued KRA, saying that the enforcement of the tax was unconstitutional and would harm their businesses.

“It is true that the impugned amendment introduces minimum tax in Kenya for the first time, hence the respondents (KRA) can hold off on its implementation for the limited period of determination of the petition,” Justice Odunga said when he temporarily suspended the implementation of the tax measures in April 2021.

Parliament amended the Income Tax Act to introduce the minimum tax at the rate of one per cent of the gross turnover, beginning January 2021.

The minimum tax is based on gross turnover and not gains or profits, and all persons, even those in a loss-making position will be required to pay.

KRA has defended the law, saying taxes are a form of raising revenue sanctioned by the Constitution and the imposition of taxes does not deprive the bar owners the right to property as alleged.

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