High Court Judges Declare New Tax on M-PESA Illegal

high court bank to M-PESA charges

Taxes on fuel, M-PESA transfers and an KES 18 per litre levy on kerosene contained in 23 laws were yesterday declared illegal by the High Court. This is after they were passed by the country’s lawmakers without the input of the Senate.

The High Court’s three-judge bench on Thursday disapproved the new laws, including the Finance Act 2018, the Tax Laws (Amendments) and the Statute Law (Miscellaneous Amendment). This ruling came after the Senate challenged by the National Assembly the decision to pass them without their consultation.

The judges gave lawmakers nine months to make sure that the laws are backed by the Senate before any other step is taken. Failure to that will result in the 23 laws getting totally abolished.

This means that consumers will continue paying the taxes up to the end of the current financial year, July 2021. This will luckily offer some relief to the Kenya Revenue Authority (KRA) that has been struggling to meet revenue targets this year amid the COVID-19 pandemic.

“We are properly guided, and in the circumstances of this case we shall suspend our orders nullifying the impugned Acts for a period of nine months from the date of this judgment within which period the respondents ought to have complied with the provisions of Article 110 (3) of the Constitution and regularised these Acts and in default, they stand nullified,” the three High Court judges ruled.

“As a court, we can do no more or less than what we are duty-bound to do, which is to declare the impugned laws what they are, a nullity.”

These taxes include the infamous 8% VAT that was introduced in September 2018 on petrol and diesel prices leading to public anger and strikes.

The mobile money taxes had also seen strong opposition from Safaricom, arguing that it would hurt the poor, most of whom relied on platforms like M-PESA rather than banking services.

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