The Kenya Revenue Authority (KRA) has suffered a setback after the High Court declared the Minimum Tax null and void, denying the taxman some Sh20 billion in annual revenues.
Following a landmark ruling delivered in the High Court yesterday, Justice George Odunga stopped KRA from enforcing the provisions of Section 12d of the Income Tax Act that introduced the Minimum Tax earlier this year.
Justice Odunga excited overburdened citizens when he threw out the infamous levy on grounds that it is unconstitutional and unfairly targets business operators who are incurring unnecessary losses.
While disapproving the usage of minimum tax as a ploy to nab tax defaulters, Odunga further stated that it could result to double taxation, a move that was huge relief to the Kenyan business community.
“Apart from minimum tax unfairly targeting people whose businesses are making losses for whatever reason, by forcing them to pay taxes from their capital as opposed to from their profits, it could potentially lead to double taxation”
“Generally, businesses suffering from losses will be sacrificed on the altar while the capital for those making profits and are able to pay their levies will not be affected,” he explained.
Mixed reactions from Kenyans greeted the ruling which comes barely a year after the Cabinet Secretary for Finance, Ukur Yatan proposed the levy. Most citizens however applauded the Judiciary for coming to the rescue of displeased taxpayers.
A section of the public upbraided Parliament for what they termed as failing to play its part in championing for the welfare of citizens who elected them into office.
Earlier this year auditing firm KPMG raised concerns that the drafting of the law on Minimum Tax lacks legislative provisions to address how the implementation of the levy.
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