Kenya: Minimum tax on gross turnover is unconstitutional (court decision)

A court decision concerning the 1% minimum tax on business’ gross turnover

A court decision concerning the 1% minimum tax on business’ gross turnover

The Court of Appeal held that the 1% minimum tax on gross turnover, introduced by the Finance Act 2020 and effective 1 January 2021, is unconstitutional.

The case is: Kenya Revenue Authority v. Stanley Waweru et al (Civil Appeal No. E591 of 2021). 


The taxpayer challenged the constitutionality of the minimum tax on the grounds that the Constitution provides an exhaustive list of taxes that the government can impose, and minimum tax is not part of the list. In addition, the taxpayer argued that income tax is to be imposed on income only, but the minimum tax was to be charged on gross turnover, regardless of whether a business was making profits or losses.

The High Court agreed with the taxpayer and held that the minimum tax violated the principles of public finance itemized under the Constitution. Consequently, the High Court prohibited the tax authority from further implementation or enforcement of the minimum tax. The tax authority appealed the High Court’s decision to the Court of Appeal.

Read a December 2022 report [PDF 653 KB] prepared by the KPMG member firm in Kenya


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