The High court, on Monday, April 19, 2021, issued conservatory orders restraining the Kenya Revenue Authority (KRA) from further implementing the one per cent minimum tax.
This order comes after the Kitengela bar owners association filed a petition in court challenging its legality.
The bar owners sought the court to grant interim conservatory orders to preserve their businesses.
In his ruling, Machakos High court judge Justice George Vincent Odunga ruled in favour of the bar owners and suspended the minimum tax.
“I find that this as an appropriate case for KRA to “hold its horses’ for now as this court navigates through the labyrinth of the respective contentions made by the parties herein,” ruled Justice Odunga.
Justice Odunga also stated that the implementation of the law would oppress millions of Kenyans who survive on Small and Medium-sized enterprises as their source of livelihood.
He declared that the court would suspend the minimum tax until the case is determined in court.
“The death of a business is not damage that can be remedied by way of damages,” he stated.
Odunga noted that the court, in the interest of justice, had granted interim reliefs at the very least to save the businesses and income of the Kitengela bar owners association and other SMEs pending the hearing and determination of the Application and Petition.
Minimum tax, which was effected on January 1, 2021, was launched by the Authority under the Finance Act 2020 in a efforts to encourage fairness and equity in the tax system.
According to KRA, the Minimum Tax applied to all businesses; whether a profit was made or not, KRA charged one per cent of the gross sales for all businesses.
The authority stated that the introduction of the minimum tax would net more businesses into the tax bracket and collect more revenue to achieve the Sh1.57 trillion target for the financial year 2020/21.