Kenyans are set to breathe a sigh of relief after the High Court in Machakos barred the Kenya Revenue Authority (KRA) from imposing the minimum tax on businesses.
In his ruling, Justice George Odunga declared 12D of the Income Tax Act unconstitutional and unlawful.
This is after the Kitengela Bar Owners Association (KBAO) had filed a petition against the taxman, and the office of the Attorney General Paul Kihara.
If implemented, the minimum tax would have been applicable to all businesses whether they post profits or not.
In his determination, Justice Odunga agreed with the petitioners that the law would have stifled businesses in the country.
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He stated that the law would be unfair to businesses entities in the country as even those making losses would be required to file one percent of their returns as tax.
Justice Odunga criticised the National Assembly for failing to involve the Senate prior to passing the law on minimum tax.
He noted that a number of counties had implemented the law, and exposed multiple businesses to the danger of double taxation.
In 2020, parliament amended the Income Tax Act allowing KRA to collect the minimum tax starting January 2021.
Businesses would have been forced to pay the tax to KRA once every quarter, had the court dismissed the petition.
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