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| Ruto/Okiya Omtatah |
On July 31, the Court of Appeal declared the Finance Act 2023 unconstitutional, citing fundamental flaws and violations of the Constitution in the legislative process. Senator Okiya Omtatah (r) moved to court against Finance Act 2023. It was introduced by President Willaim Ruto’s (l) administration to increase revenue collections. The judgment was delivered on an appeal by the National Assembly and its speaker vs. Okiya Omtatah Okoiti and others. “Having found that the process leading to the enactment of the Finance Act, 2023 was fundamentally flawed and in violation of the Constitution, sections 20 to 38, 52 to 63 and 23 to 59 of the Finance Act, 2023 stand equally vitiated and therefore unconstitutional,” the court ruled. Implications of the ruling Having been declared the Act unconstitutional, changes to the tax laws that were introduced through the Finance Act 2023 will be scrapped. Notably, the housing levy law will not be affected because, in 2023, the court ruled that the housing levy could not be established through the Finance Act, and the Affordable Housing Act 2024 was introduced to anchor the levy. Tax laws struck down Here are some tax laws that have been struck down following the ruling by the Appellate Court. Increase in PAYE (Pay as You Earn) taxes. Annual advance tax rate for vehicles. Requirements for companies and businesses to conduct all transactions via electronic tax invoicing management (eTIMS). Tax on the income derived from the transfer or exchange of digital assets (such as crypto currency transactions) at a rate of 3%. Withholding tax on sales promotion, marketing and advertising services for residents -5% Withholding tax on digital content monetisation to residents at 5% and at 20% to non-residents; Withholding tax on rental income received on behalf of the owner. Requirements to remit withholding taxes within five working days. Reduction of residential rental income tax (MRI) rate from 10% to 7.5%. Treatment of club entrance and subscription fees paid by employer on behalf of the employee as a benefit and taxed on the employee.
by Elijah Ntongai