Minimum Tax declared unconstitutional by High Court
Machakos high court on Monday has declared a tax law allowing the Kenya Revenue Authority (KRA) to demand minimum tax from businesses as unconstitutional.
The ruling by Justice George Odunga decreed that it is unfair to bundle loss-making companies into the same basket as those with a history of tax evasion.
“Minimum tax provisions are unconstitutional and the guidelines should be considered void. I, therefore, issue an order restraining KRA from implementing, further implementing or enforcing the provisions of Section 12D of the Income Tax Act,” Justice Odunga ruled.
Minimum tax was introduced under the Finance Act 2020 to be charged at the rate of one per cent of the gross turnover of a business starting January 1, 2021.
In his ruling, Odunga explained that the minimum tax subjects businesses to double taxation and unfairly targets loss-making businesses to pay taxes from their capital.