Finance Act 2023: William Ruto's Gov't Plans To Backdate New Taxes If Court Upholds Controversial Act

• Chief Justice Martha Koome appointed a three-judge bench which is expected to deliberate on the orders blocking the Finance Act 2023 on Friday, July 28
• Kenya Revenue Authority (KRA) advised its officers to prepare to implement the changes provided in the Act should the court uphold the law
• KRA said all new tax changes should be effected based on the effective dates pronounced in the Finance Act 2023

Kenyans are staring at increased taxes effective July 1, 2023, should the court lift orders blocking the implementation of the Finance Act 2023.

The High Court blocked the implementation of the new taxes after President William Ruto approved them into law.

Finance Act 2023 3-judge bench hearing

Chief Justice Martha Koome appointed a three-judge bench, which is expected to issue a ruling on Friday, July 28.

In an internal circular, Kenya Revenue Authority (KRA) ordered its officers to follow specific dates provided for in the Finance Act 2023 while implementing tax changes.

“All officers are advised to read this circular and the specific provisions of Finance Act 2023. Further, officers are advised that the provisions of the Act shall come into effect on the dates specified in Section 1 of the Act. The Act provides the following effective dates July 1, 2023; September 1, 2023; and January 1st, 2024,” read the memo in part.

This means that all new tax measures, effective July 1, 2023, will have to be paid in the next payroll if the court endorses the law.

These are the 1.5% Housing Levy, 35% PAYE for workers earning over KSh 800,000 per month, and 32.5% for workers earning between KSh 500,000 to KSh 800,000, among others.

"Subject to the directions of the courts, the ICT division should work closely with the revenue departments to ensure that the system is ready to support the implementation of the Act,” added KRA, as quoted by Business Daily.

Okiya Omtata's petition

High Court Judge Mugure Thande stated that she was satisfied that the application met the test for issuing conservatory orders.

Busia senator Okiya Omtatah and six other Kenyans challenged the constitutionality of the Bill while it was being debated.

The Act listed a host of taxes to generate revenue to fund Ruto's maiden KSh 3.6 trillion budget set for implementation in July 2023.

Ruto's tax revenue targets

Ruto set a revenue collection target for KRA to hit in the 2022/23 financial year that ended on June 30, 2023.

The taxman reported a 6.7% revenue collection growth to KSh 2.166 trillion for the same period under review.

The authority highlighted increased inflation, the Kenya Shilling depreciation against the US dollar and global economic slowdown among the factors that decelerated revenue collection.