The Kenya Revenue Authority will no longer demand payment of the 1 percent minimum tax introduced by the government in 2020, The High Court sitting in Machakos has ruled.
Justice George Odunga said implementation of the law will only serve to stifle the businesses and livelihood of millions of Kenyans who rely on small and medium sized enterprises for income.
The order follows a petition filed by registered officials of the Isinya East Sub County Bar Owners Association. The minimum tax has henceforth been blocked until the issues raised by the association are heard and determined
“The death of a business is certainly not a damage that can be remedied by way of damages. That is why it’s in the interest of Justice that this court intervene to preserve the business and livelihood of petitioners,” he said.
The minimum tax, which was introduced through the Finance Act 2020 in January last year is a base income tax applied to all persons whether they make a profit or not. Its goal is to net in more enterprises into the tax bracket despite their financial status.
The Finance Act 2020 stated that the minimum tax would be payable where it exceeds the instalment tax payable to KRA .It was to be made on or before 20th of each period ending on the fourth, sixth, ninth and 12th month of the year of income.
The Kenya Association of Manufacturers last year raised an alarm, saying the new tax would have a negative impact on businesses and deter startups. The association further said that it would lead struggling businesses to premature closure as a result of increased cash flow constraints and consumer costs.