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Thursday, July 18, 2024

High Court Blocks KRA from Imposing VAT on Club Membership Fees

The High Court has rejected the move by the Kenya Revenue Authority to slap a 16 percent Value Added Tax on the annual subscription and entrance fees charged by golf and sports clubs.

Image: Client in KRA reception 

Justice Nixon Sifuna rejected an application by KRA seeking to set aside the application that barred the taxman from collecting the revenue. In his ruling, Justice Sifuna said even though tax is a valid and necessary source of the government's revenue, there must be legal and rational justification for every tax levied on citizens.


"You can't tax everything and anything," the judge said. "There must be and exist a legal and rational basis for every tax or tax stream. Taxation cannot be by sheer caprice or whim for the mere sake of taxing or for no reason at all."


The decision of the court reiterates the fact that taxation must always be based on legality and rationale, in order to prevent arbitrary or unjustified tax demands.

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