Finance Act 2023: Law Society Of Kenya Wants KRA Stopped From Collecting New Taxes

• President William Ruto's government implemented the Finance Act 2023 after the appellate court lifted stay orders
• Kenya Revenue Authority (KRA) effected changes to its tax systems to collect new taxes like the Housing Levy
• Law Society of Kenya (LSK) challenged the new law saying it violates the constitution and overburdens Kenyans

The Law Society of Kenya (LSK) has joined other petitioners challenging the Finance Act 2023.

In a suit filed at the Constitutional Human Rights Court, LSK wants the court to stop Kenya Revenue Authority (KRA) from collecting taxes.

KRA effected changes in its systems to collect new taxes after the appellate court lifted orders blocking the implementation of the bill.

LSK argued in the petition filed on Friday, July 4, that the Finance Act 2023 violates the Constitution and will overburden Kenyans already facing tough economic times.

"We are seeking the court to issue orders prohibiting the government from implementation, further enforcing section 10 (2) (3) of the Income Tax Act as amended by Section 7 of the Finance Act 2023.

"This Court ought to safeguard the people’s right to life which is on the verge of being rendered meaningless since their opportunity to make a living is under threat by the impugned Section 7, 33 (a)and 84 of the Finance Act," said LSK in a certificate of urgency to the court.

LSK suit followed a petition filed by six Kenyans, including Busia senator Okiya Omtatah, that saw High Court Judge Mugure Thande suspend the Act.

Lady Justice Thande directed the case to Chief Justice Martha Koome, who appointed a three-judge bench to decide on the grievous issues raised by the petitioners.

The case will be mentioned before the three judges on Monday, August 7, 2023.

Employers and employees hit by Finance Act 2023

LSK further argued that employers and employees would be the worst hit by the new taxes, a move that could escalate unemployment in the country.

In July 2023, Federation of Kenya Employers (FKE) Head of Advocacy, Consulting and Partnership Stephen Obiro warned that the Act could hurt employers.

Obiro noted that most employers are considering restructuring, which could lead to mass job cuts.

Housing Levy backdated

KRA already directed employers to deduct the 1.5% Housing Levy accrued, effective July 1, 2023.

The taxman called on employers to be compliant, failure to which they risk a 2% penalty of unpaid funds.

For a person earning a gross salary KSh 50,000, the Housing Levy deduction for July and August 2023 amounts to KSh 1,500.

Employers must also pay KSh 1,500 per employee during the same month under review, with KSh 750 covering up the missed July remittances.