I&M Bank House, 7th Floor, 2nd Ngong Avenue

+254 716 209 673


High Court Issues Conservatory Orders Against Enforcement Of Minimum Tax Provisions

CM Advocates > Legal News  > High Court Issues Conservatory Orders Against Enforcement Of Minimum Tax Provisions

High Court Issues Conservatory Orders Against Enforcement Of Minimum Tax Provisions

What are Prejudicial Dispositions?

The High Court of Kenya issued a ruling on 19th April 2021 granting conservatory orders restraining the Kenya Revenue Authority (KRA) from implementing and enforcing the minimum tax provisions pending the determination of a petition challenging the constitutionality of the minimum tax provisions, that is, Section 12D of the Income Tax Act (ITA).

Brief facts

The ruling was issued in a petition filed by the officials of Isinya East Sub County Bar Owners Association who operate their businesses within the Counties of Kajiado and Machakos. The petitioners challenged the constitutionality of the minimum tax provisions which were introduced into the ITA by the Finance Act 2020 on, inter alia, the following grounds:

•    The minimum tax is unconstitutional as it does not fall within the category of taxes imposable by the National Government as envisaged under Article 209 (1) of the Constitution;
•    Income tax is only chargeable on gains or profit and not as gross turnover as implied by minimum tax hence minimum tax cannot be deemed to amount to income tax
•    The minimum tax is inconsistent with the meaning and purpose of income tax as provided for under the ITA which allows for deduction of expenses in the determination of taxable gains and profits
•    Levying of minimum tax on gross turnover as opposed to gains or profit will bring rise to an occurrence where a tax payer, subject to minimum tax will pay ‘income tax’ exceeding the statutory 30% provided for under the ITA
•    Introducing minimum tax without the reference of the said amendment to the Senate for discussion violated the constitutional requirements
•    The minimum tax violates the Petitioners’ right to property since it threatens to arbitrarily expropriate the losses and capital of the Petitioners and other non-profit making entities

The petition was challenged by the National Treasury (NT), KRA and the Attorney General on, among others, the following grounds:

•    That the petition is a threat to the doctrine of separation of powers and is an encroachment to the legislative mandate of parliament
•    That the impugned provisions enjoy a presumption of constitutionality having been enacted pursuant to the sovereign authority donated to Parliament.

High Court’s Ruling

In issuing conservatory orders against implementation of the minimum tax provisions, the High Court observed that the issues raised by the petitioners disclosed substantial questions of constitutional law as what is at stake is the balancing of the need to secure the government’s revenue sources viewed against the protection of the Bill of Rights. Thus, the High Court directed that the KRA holds off on its implementation of the minimum tax provisions for the limited period of determination of the petition.

Observations and Conclusion

As currently worded, the minimum tax provisions are riddled with various interpretational and implementation challenges as previously set out in our previous tax alert on minimum tax. The interpretational issues have largely been raised in the petition. Thus, the High Court ruling is welcome since it presents an opportunity to subject the minimum tax provisions to scrutiny and address the interpretational and implementation challenges arising therefrom.

It is also worth-noting that the ruling comes a day to the deadline for accounting for the minimum tax for the period ending on the fourth month of the year of income, that is, 20 April 2021. The upshot of the ruling is that taxpayers are not obligated to account for minimum tax pending the hearing ad determination of the petition. However, in the event that the petition is dismissed and the taxpayers are found to fit within the minimum tax provisions, the late payment of minimum tax will be subject to late payment penalty and interest.

In light of the conservatory orders, the KRA issued a statement on 19th April 2021 to the effect that the KRA will abide by the High court’s ruling awaiting the outcome of the petition slated for hearing on 19 May 2021. In the said statement, the KRA stated that taxpayers who have already accounted for the tax will retain the tax paid as a credit in their iTax ledgers pending the outcome of the petition.

It is also worth-noting that the ruling does not affect the requirements to comply with instalment taxes.

We will continue monitoring the developments on this matter and keep you updated.  For more information and assistance on the above, please contact our tax advisory team through email at

CM Advocates has a fully-fledged tax law advisory business unit that offers a vast range of tax services. Our highly qualified and experienced personnel will assist you with your tax matters and ensure that your business is tax compliant and assist you to analyse and mitigate any tax risks or exposure.


× How can I help you?