The Federation of Kenya Employers (FKE) has asked the Kenya Revenue Authority (KRA) to give direction on tax remittance after a court ruling that rendered the Finance Act 2023 unconstitutional.
FKE in a letter on Friday, August 9, 2024, demanded for clarification on payment of July 2024 taxes after the judgement declared the Finance Act 2023 unconstitutional prospectively from the date of the judgment.
The Federation highlighted that its members and other taxpayers in Kenya are unable to remit taxes in accordance with the Judgment.
“The Federation of Kenya Employers (FKE) regrets that our members and indeed all taxpayers in Kenya are unable to remit taxes in accordance with the Judgment for reasons that the Kenya Revenue Authority (KRA) has not yet configured its systems to comply with the court of appeal Judgment,” reads part of the statement.
In the demands, the Federation asked KRA to clarify to employers and all taxpayers on how they should pay their taxes in view of the Court of Appeal Judgment.
FKE Issues Demands to KRA
Further, FKE highlighted that Friday is the last day for the remittance of July 2024 taxes which may see members face penalties.
“We also note that today the 9 of August 2024 is the last day for the remittance of July 2024 taxes and our members may face penalties If KRA does not immediately address this concern,” FKE added.
Also Read: Another Blow to Govt as Court Rules on Finance Act 2023
The demands by FKE came following the Court of Appeal ruling which declared that the process followed in passing the Finance Act 2023 was flawed.
According to the Appellate Court, the enactment of the Finance Act, 2023 violated Articles 220 (1) (a) and 221 of the Constitution as read with sections 37, 39A, and 40 of the Public Finance Management Act (PFMA) which prescribes the budget making process.
“We uphold the finding by the High Court that concurrence of both houses in the enactment of the Finance Act, 2023 was not a requirement under Article 114.
“Having found that the process leading to the enactment of the Finance Act, 2023 fundamentally flawed and in violation of the Constitution, sections 30 to 38, 52 to 63 and 23 to 59 of the Finance Act, 2023 stand equally vitiated and therefore unconstitutional,” reads part of the ruling.
“A declaration is hereby issued that the failure to comply with this constitutional dictate renders the entire Finance Act, 2023, unconstitutional”
Finance Act 2023 Declared Unconstitutional
Further, the court emphasized that Parliament is obligated to provide reasons for adopting or rejecting proposals received from the public during the public participation process.
Also Read: John Mbadi Softens Stance on Finance Bill, Hints at Bringing Back its Provisions
The court declared the Finance Act null and void on grounds that Parliament introduced post-public participation to amend the Income tax Act, Value Added Tax Act, Excise Duty Act and Miscellaneous Fees and Levies Act, are unconstitutional.
Following the ruling, the National Treasury filed a notice of appeal with the Supreme Court of Kenya, challenging the Court of Appeal’s decision.
The Treasury argued that overturning the Finance Act 2023 threatens to slash Ksh164 billion from its anticipated revenue—a critical blow to an already strained fiscal framework.
However, the Supreme Court on Friday, August 2 delivered a blow to the National Treasury by rejecting its plea for a stay on the nullification of the Finance Act 2023.
The Supreme Court’s decision not only rejected the Treasury’s request but also certified the matter as urgent, scheduling it for hearing during the August court recess.
The Court’s refusal to grant a stay means that the Finance Act 2023, which had been declared unconstitutional by the Court of Appeal, remains void.
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