In the wake of a landmark court decision that declared the Finance Act 2023 unconstitutional, the Federation of Kenya Employers (FKE) has issued a stern call for clarity regarding tax remittance procedures.
The Court of Appeal's judgment, delivered on July 31, 2024, declared the Finance Act 2023 unconstitutional, effective prospectively from the date of the judgment.
The ruling left many employers and taxpayers in a state of uncertainty, particularly as they approach the deadline for tax payments.
Jacqueline Mugo, Executive Director and CEO of the Federation of Kenya Employers (FKE) expressed concerns in a letter to the taxman regarding the ongoing issues faced by employers and taxpayers due to the lack of system updates to reflect the court's decision.
Mugo explained that systems were not configured to align with the Court of Appeal’s ruling, thereby complicating the tax remittance process.
"The Federation of Kenya Employers (FKE) regrets that our members and indeed all taxpayers in Kenya are unable to remit taxes in accordance with the Judgment for reasons that the government has not yet configured its systems to comply with the court of appeal Judgment," Mugo stated in her letter.
The timing of the ruling was particularly critical as the government stated August 9, 2024, as the final day for remitting July 2024 taxes.
“The purpose of this open letter is to ask KRA to urgently clarify to employers and all taxpayers in Kenya how they should pay their taxes in view of the Court of Appeal Judgment.”
“We also note that today the 9th of August 2024 is the last day for remittance of July 2024 taxes and our members may face penalties if KRA does not immediately address this concern,” the federation explained.
Mugo pointed out that this situation puts taxpayers at risk of incurring penalties for delays or errors in tax payments, a consequence that underscores the urgency of the matter.
The FKE's call for immediate action seeks to prevent any potential legal or financial repercussions for employers and taxpayers due to the current lack of clarity.
The federation is urging the government to provide prompt and clear guidelines on how to proceed with tax payments in light of the recent court ruling.
