The High Court sitting in Machakos has stopped the Kenya Revenue Authority from demanding payment of the minimum tax introduced by the government last year.
Justice George Odunga said enforcement of the impugned legislation stands to kill businesses and livelihood of millions of Kenyans operating small to medium enterprises which form the majority of the business community.
The order will remain in force pending a petition filed by registered officials of the Isinya East Sub Ciunty Bar Owners Association.
"The death of a business is certainly not a damage that can be remedied by way of damages. That is why it's in the interest of Justice that this court interven3e to preserve the business and livelihood s of the petitioners," he said.
The tax took effect on January 1, 2021.
The tax, introduced through the Finance Act 2020, is a base income tax payable by all persons regardless of whether or not they make a profit. It is aimed at bringing more enterprises into the tax bracket despite their financial status.
The Kenya Association of Manufacturers had last year said the new tax would have an adverse effect on businesses, including deterring startups, increasing costs to consumers and increase cash flow constraints, consequently, pushing struggling entities to a premature close.
According to the Finance Act 2020, the minimum tax would only be payable where it exceeds the instalment tax payable to the taxman.
The payment was to be made on or before the 20th day of each period ending on the fourth, sixth, ninth and 12th month of the year of income.
