KRA Barred From Collecting Minimum Tax Following Petition

The Kenya Revenue Authority (KRA)  has been temporarily stopped by the High Court from collecting minimum taxes from businesses.  This temporary ban has put a halt to KRA’s plan of surmising Sh21 billion by June of 2021.

The ban was put in place following three officials of the Kitengela Bar Owners Association,  who sued KRA claiming that the implementation of the minimum tax was unconstitutional and would lead to harm to their business’. They argued that the move leaves taxpayers facing uncertainty and unable to plan for their tax liability and compliance . They further added that charging minimum tax on gross turnover also affects the finances of county governments which already have their own levies on businesses .

High Court judge George Odunga put a hold on the implementation of the tax following the petition by the traders that “raised weighty questions of the law” and therefore time was needed to determine the validity of the petition.

The minimum tax was introduced after the government amended the Income Tax Act (ITA)  in January 2021. The tax is based on gross turnover instead of profits and everyone is expected to pay it despite making losses in one’s business.

By Fatiha Shabir