Businesses are hopeful as they wait the Kenya Revenue Authority (KRA) to refund money it collected as minimum tax. The tax body argued that the High Court ruling that Section 12D of the Income Tax unconstitutional means that the taxman has to start refunding the collected revenues.
KRA has however moved to the Court of Appeal to challenge the High Court’s judgement made on September 20, 2021; that stopped it from collecting the minimum tax at the rate of 1% of the gross turnover.
This minimum turnover is based on gross turnover and not gains or profits, and that all businesses even those making loses are required to pay.
High Court Judge Justice George Odunga ruled that the government’s plan to impose a minimum tax on businesses even when the business reports loss is illegal.
The minimum tax took effect in January 2021 after changes were made on the Income Tax Act in 2020. KRA’s move to the Court of Appeal shows its attempt to enforce the collection of Ksh 21 billion from businesses in the year to June, 2022 an effort to plug its revenue shortfalls.
Treasury CS Ukur Yatani told Parliament that the High Court’s judgement left KRA with sh 22 billion budget deficit.