On September 20, 2021, Justice George Odunga issued a landmark ruling that declared the minimum tax imposed on businesses by the Kenya Revenue Authority (KRA) as unconstitutional.
The ruling was a result of a petition filed by the Kitengela Bar Owners Association, led by Stanley Waweru (Chairman), Samwel Gitonga (Vice-Chairman), Bernard Oranga (Organizing Secretary), and Paul Mukono Kuria (Patron), against the National Assembly, the KRA Commissioner General, and the Attorney General.
The minimum tax, which was introduced in the Finance Act, 2020, was set to be 1% of the gross turnover for businesses, effective January 1, 2021. However, the bar owners argued that this tax would lead to the 'absolute annihilation' of their businesses and many small and medium enterprises in the already struggling economy.
Justice Odunga agreed with the petitioners, declaring section 12D of the Income Tax Act unconstitutional and nullifying the 'Guidelines on minimum tax'. This ruling was welcomed by the business community and lobby groups, who argued that focus should be on economic recovery and strengthening businesses in the wake of the pandemic.
According to the Kenya Association of Manufacturers (KAM), the Retail Trade Association of Kenya (Retrak), and the Kenya Flower Council, the ruling provides much-needed relief to businesses and ensures that many remain open and productive.
