Kenya: VAT regulations held invalid (court decision)

A High Court judgment concerning the 2017 value added tax (VAT) regulations

A High Court judgment concerning the 2017 value added tax (VAT) regulations

The High Court issued a judgment holding that value added tax (VAT) regulations (2017) were invalid because the appropriate process for legislative review of the regulations was not timely completed.

The case is: Commissioner of Domestic Taxes (KRA) v. W.E.C Lines (K) Limited (Taxpayer) [2022] KEHC 57 (KLR).


The taxpayer applied to the Kenya Revenue Authority (KRA) for VAT refunds for the period February 2015 to January 2018, relating to services that the taxpayer provided to its parent entity in the Netherlands. The tax authority rejected the request for the VAT refund after reviewing the agency agreement between the taxpayer and the Dutch entity. In rejecting the refund application, the KRA relied on Regulation No. 13 of the VAT Regulations, 2017 and concluded that the taxpayer’s supplies did not qualify as exported services and were taxable at 16%.

The taxpayer appealed to the Tax Appeals Tribunal which agreed with the taxpayer and allowed the appeal. The KRA subsequently appealed to the High Court which affirmed the tribunal’s decision.

In holding that the taxpayer was entitled to a refund of VAT, the High Court observed that the VAT Regulations, 2017 ceased to have any effect on the eighth day after the regulations were not tabled before the National Assembly (that is, the regulations were not presented for review within the required seven-day period). Thus, the regulations were null and void.

The High Court concluded that the taxpayer was entitled to the VAT refund because the services offered were exported services and were zero-rated for VAT purposes.

Read a February 2022 report [PDF 238 KB] prepared by the KPMG member firm in Kenya 


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