The Kenyan High Court in Machakos on September 20 held that the minimum tax on business revenues introduced in the country earlier this year was unconstitutional because it would subject taxpayers to double taxation and unfairly diminish business capital.
The same court had suspended implementation of the tax in April – the day before the first payment on the tax would have been due. The minimum tax provision, which became effective January 1, imposes a tax at a one percent rate on businesses’ gross revenues, regardless of profit.
The Kenya Revenue Authority has indicated that it disagrees with the finding of the High Court and plans to challenge the decision before the Court of Appeal.
There is no double taxation. Should the business make taxable profits, it will offset the minimum tax earlier paid against the corporation tax computed on taxable profits…much like how witholding tax or withholding vat works.