TAX NEWS - JUNE 2010
Kenya Tax: Kenya Revenue Authority (KRA) free to tax human rights commissioners
This follows a High Court decision declining to give temporary orders stopping Kenya Revenue Authority (KRA) from seeking tax in arrears from the officials of the Kenya National Commission on Human Rights (KNCHR).
Lady Justice Roselyne Wendoh instead directed the parties to appear for the hearing of the case on June 17.
The KNCHR wants its commissioners exempted from paying tax on their allowances.
According to the agency, its commissioners have the same status as judges, and since judges' allowances are not taxed, the Finance permanent secretary had no authority to tax them.
The agency argues that if unchallenged, this would interfere with its functional independence.
The decision to tax the KNCHR commissioners' allowances was communicated to them on August 4, 2009.
The decision was made because the rights agency falls under the Executive arm of the government. But the commission denies being part of the Executive.
The Treasury included them in the category of constitutional office holders whose allowances are subject to taxation.
And now the commission says the decision was taken unilaterally. It contends that the Finance Ministry and the KRA needed to consult with the Parliamentary Committee on Legal Affairs before reaching the verdict to tax its members.
It also argues that the Finance Ministry's decision has no backing in law.
Adverse effects
The commissioners argue that previous office holders were not taxed and do not see why they should be made to pay without a hearing.
They said the decision was oppressive and had adverse effects on the commissioners' financial commitments and obligations.
The Kenya Revenue Authority (KRA), the Finance, Justice, and Public Service ministries, the clerk of the National Assembly, and the Attorney General are expected to file their reply in the next 14 days.
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