Proposed tax on transactions above Ksh.500,000 suspended
- The Kenya Bankers Association moved to court challenging "Robin Hood" tax on transfer of money in excess of Ksh.500,000.
- They argue that there was no public participation.
- The hearing has been set for September 17, 2018.
The High Court in Nairobi has issued conservatory orders suspending the implementation of the excise duty introduced by the Finance Bill 2018 on money transferred by banks.
In a ruling by Justice Wilfrida Okwany, the court directed that the implementation be suspended until the proper definition of money transferred by banks is provided.
According to Justice Okwany, the excise on money transferred by banks is an important issue that cannot be left to guesswork or the individual interpretation by the banks.
“This Court also takes notice of the fact that the impugned bill is still in intact nascent Athena’s it is yet to be legislated into Law by parliament,” Court ruled
This comes after the Kenya Bankers Association moved to court against Kenya Revenue Authority and the Attorney General challenging the Robin Hood tax on the transfer of money in excess of Ksh.500,000.
They argue that there was no public participation in financial matters in relation to the introduction of the new excise duty adding that the imposition of a new duty on less than 10 days notice is neither reasonable nor procedurally fair.
“A conservatory order do issue to delay the implementation of the excise duty introduced by the finance Bill 2018 until such time allowed for alteration of the computer systems operated by the banks to implement the charge of the duty,” court documents read.
They claim that the Finance Bill 2018 has not provided any guidelines on how the duty is to be applied and no specific exclusions from the duty is provided.
They claim that the introduction of the new Bill has an economic impact in that it will lead to erosion in investment returns between 1.0 to 5.0 depending on the nature of the fund and investment strategy.
The association further claim that the proposed duty will significantly hamper the county’s vision 2030 aspirations due to the unattractiveness of cost of carrying out transactions in Kenya as a result of the tax.
They are of the view that certain teansfers should be excluded from the ambit of this duty based in international best practice, practical application and equity in tax provisions.
The Association avers that its members will find it difficult if not impossible to carry out transactions over Ksh.500,000 sfrom today with consequent disruption of business for the customers of all banks and damage to the economy of Kenya.
“There is ambiguity and lack of clarity I. Terms in which the duty is imposed in that there is no definition of what constitutes “money transferred by banks” argues KBA
The hearing has been set for September 17, 2018.
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