The Kenya Revenue Authority (KRA) has said it will ill retain already paid minimum tax as a credit in taxpayers iTax ledger pending the outcome of the Petitions.
The moves comes after the High Court sitting in Machakos on Monday, barred Commissioner General Githii Mburu through KRA from implementing section 12D of the Income Tax Act which gives the authority the powers to collect a minimum tax from businesses at the rate of 1% of gross turnover.
The tax which came into force on 1st January 2021 required businesses to pay the tax in installments which shall be due on the twentieth day of each period ending on the fourth, sixth, ninth and twelfth month of the year of income.
Already, some businesses had begun paying the installments with the first being due Tuesday 20th April 2021.
KRA had intended to net in excess of Kshs. 20 billion from the Minimum Tax before the court issued a Conservatory Orders on implementation of the tax in a petition petition filed by Kitengela Bar Owners Association.
“In the result I grant conservatory orders restraining the 2nd Respondent whether acting jointly or severally by itself, its servants, agents, representatives or howsoever otherwise from the implementation, further implementation, administration, application and/or enforcement of Section 12D of the Income Tax Act, Chapter 470 of the Laws of Kenya as amended by the Tax Laws (Amendment) (No.2) Act, 2020 by collecting and/or demanding payment of the Minimum Tax pending the hearing and determination of this Petition,” Justice George Odunga ruled on Monday.
Kenya Association of Manufacturers (KAM) has backed the order as timely as businesses reel from effects from the effects of COVID-19.
“This order fully aligns with the petitions submitted to the courts by the above-mentioned Associations on the increased cost burden to businesses across the country. It also captures the mood and the spirit of the country as we grapple with the difficulties presented with navigating the COVID-19 pandemic,” said KAM.