The case relates to the retrospective increase of excise duty on bank charges from 10% to 20% with effect from 1 July 2018 which was only published on the 28 September 2018. This provision was not in the Bill as originally passed by the National Assembly but was inserted after the President referred the Bill back to the National Assembly.

The court held that there was no need for further public participation on the amendments proposed by the President and that the National Assembly could pass tax legislation which was to operate retrospectively. However, the court agreed with our submission that it was unfair imposition of a tax to require banks to pay the increased excise duty on transactions on which duty had been imposed and collected at the correct rate at the time the transaction was completed. The court noted that the banks were simply acting as collection agents for the Kenya Revenue Authority and it would be extremely difficult for the banks to collect the additional duty.

The court held that the National Assembly failed to take into account the potential detrimental effect that the imposition of an increased tax would have on these historical transactions and the impracticality and unreasonableness in collecting the tax when the transactions were already completed.

Attached is a copy of a judgment delivered on 5 November 2020.