Relief for businesses as High Court suspends implementation of minimum tax
The High Court has stopped the implementation of a 1 percent minimum tax which was to fall due on April 20, 2021.
Justice George Odunga issued conservatory orders blocking the Kenya Revenue Authority (KRA) from effecting the tax pending the hearing and determination of the petition.
“… I grant conservatory orders restraining the 2nd Respondent Kenya Revenue Authority (KRA) whether acting jointly or severally by itself, its servants, agents, representatives or howsoever otherwise from the implementation, further implementation, administration, application and/or enforcement of Section 12D of the Income Tax Act, Chapter 470 of the Laws of Kenya as amended by the Tax Laws (Amendment) (No.2) Act, 2020 by collecting and/or demanding payment of the Minimum Tax pending the hearing and determination of this Petition.” said justice Odunga.
The order follows a petition challenging the implementation of the new tax by the Kitengela Bar Owners Association.
The officials of the association sued the National Assembly alongside KRA’s Commissioner General and the Attorney General arguing the minimum tax contravenes the constitution.
They warned tax obligations under the minimum tax could rise beyond the statutory 30 percent corporate tax leaving a heavier taxation burden.
The tax was to be paid in four installments and on the 20th day of each period ending on the fourth, sixth, ninth and twelfth month of the year of income.
Technically, this means businesses would account for the tax on April 20, July 20, October 20 and January 20.