NAIROBI, Kenya, Jul 2 – The Kenya Bankers Association (KBA) is in court to challenge the move to tax 0.05 percent of Sh0.5 million and above transacted through banks or other financial institutions.
The Association wants the implementation of the tax, now commonly known as ‘Robin Hood’ tax, introduced by the Finance Bill 2018 suspended arguing there was no public participation with regard to the introduction of the new excise duty.
Through lawyer Kenneth Alison, the bankers have further imputed imposition of new duty without giving its members adequate notice.
“Less than 10 days notice is neither reasonable nor procedurally fair,” they state.
In addition, the association claims 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 has been provided.
“The implementation of the duty will require changes to the computer programs of all members which cannot be done in this limited time,” read court papers.
The petitioner has asked the court to find that the new tax measures negatively impact the economy and lead to erosion in investment returns between 1.0 to 5.0 percent depending on the nature of the fund and investment strategy.
It has also 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.
It is the associations’ argument that certain transfers should be excluded from the ambit of this duty based on international best practice, practical application and equity in tax provisions.
In his speech at Parliament Buildings, Treasury Cabinet Secretary Henry Rotich said the Kenyan economy has a well-established financial sector in the region with significant sums of money transferred.
“In order for the government to get a fair share of revenue from this financial activities and to finance critical government programmes, I propose to introduce a Robin Hood Tax of 0.05 percent on any amounts of five hundred thousand shillings or more transferred through banks and other institutions,” Rotich said in his budget speech.
He also announced that he had increased excise duty on mobile money transfers by two percent, meaning that Kenyans pay more for any transaction they make on the mobile phones starting July, 2018.