NAIROBI, Kenya, Jul 19 – The High court has suspended the implementation of the 0.o5 per cent tax on the transfer of money more than Sh500,000 through banks and financial institutions pending determination of a case lodged by Bankers Association.
Judge Wilfrida Okwany has said the new tax category is ambiguous adding that the excise of duty transferred is an important issue that cannot be left to the interpretation by the banks.
“Until such a time a proper definition of money transferred by banks is provided the order shall remain in force,” she has ruled.
The Bankers association had asked the court to stop implementation of the excise duty introduced by the Finance Bill 2018 until such a time that banks will alter their computer systems to capture the new excise duty.
Banks have also faulted the tax measure arguing there was no public participation in financial matters with regard to the introduction of the new excise duty. The Association has further imputed imposition of new duty without giving its members adequate notice.
In addition, bankers 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 are provided.
Bankers argue that the introduction of the new bill will negatively impact the economy and lead to erosion in investment returns between 1.0 to 5.0 per cent depending on the nature of the fund and investment strategy.
It has also been contended that the proposed duty will significantly hamper the Country’s vision 2030 aspirations due to the unattractiveness of cost of carrying out transactions in Kenya as a result of the tax.
Several banks had already informed their clients that they would start to implement the excise duty in July.
Consequently, the judge has directed the Bankers Association to file and serve its papers on KRA to facilitate a hearing on September 17.