Court suspends KRA's new fuel tax


A Total fuel station in Nairobi. FILE PHOTO | NMG

The Kenya Revenue Authority (KRA) has suffered another setback after the High Court suspended the increase of excise duty on petroleum products effective October 1.

Two Kenyans had petitioned court to stop the impending decision by the taxman to increase excise duty on the products by 4.97 percent in line with average annual inflation.

Mr Isaiah Odando and Mr Wilson Yata argued that the decision would put pressure on cost of living.

Justice James Makau on Monday said the petitioners have a strong case with the likelihood of success. If the interim order is not granted, the petitioners and Kenyans would stand prejudiced, the judge said.

He also observed that if KRA adjusts the excise duty rates as proposed, Kenyans would be exposed to danger.

This comes barely a week after the court found KRA's plan to impose a minimum tax on corporate sales, even when a company reports losses, as illegal. It was a blow to the taxman which was looking to collect at least Sh21 billion annually from the tax.

The excise duty adjustment is in line with the law that demands that it be revised upwards in tandem with the cost of living measure or the average rate of inflation in the 12 months through June.

KRA is for the first time required to get parliamentary approval to effect the new rates following changes to the law that came into effect last year.