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Tax headache for Treasury

Whichever way one looks at it, the High Court’s decision to stop the taxman from collecting taxes that Parliament has not approved has left companies that collected the taxes in a difficult position. By the time the court order came, the firms, which act as Kenya Revenue Authority (KRA) agents, had collected the new excise taxes for 19 days, leaving them with millions of shillings in tax revenues.Though the date for remission is yet to come, the court decision has left the agents in a difficult legal position.Tracing consumers who paid the tax is an uphill task.

The other option would be to go ahead and surrender the money to the KRA, a move that would raise the question as to whether the agency can legally receive what it has been stopped from collecting.It remains to be seen how the Treasury, which originated this problem in its quest to start collecting the taxes ahead of parliamentary approval, deals with it.This is certainly the Treasury’s dog and must clean after it.

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