Billions of taxpayers' shillings are lying idle in banks and other financial institutions after a High Court ruling that suspended the "Robin Hood" tax.
Mobile phone operators and oil marketers are among those who have remained stranded after Treasury Cabinet Secretary Henry Rotich failed to issue a directive on how to process the billions in levies collected during the 19 days before they were ordered to cease.
Activist lawyer Okiyah Omtatah moved to court noting that the institutions had already begun making the deductions yet Parliament had not approved Finance Bill 2018 that created the new taxes.
The institutions act as the collecting agents for the Kenya Revenue Authority (KRA) and experts suspect that the collected monies may remain in their custody.
[caption caption="Treasury CS Henry Rotich offers a reply during a past meeting at Parliament"]
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CS Rotich justified the 0.05% tax collection for the institutions using the Provisional Collection of Taxes and Duties Act that put in effect parts of the 2018 Finance Bill.
The move allowed KRA to begin receiving the remittance before Parliament could either allow or reject the new taxes.
Partner and director at consulting firm PriceWaterhouseCoopers (PwC) Job Kabochi explained the conundrum by highlighting that companies were now at a loss on whether to return the funds collected or hold on to them.
"A lot of these taxes — VAT, excise and withholding taxes — have not fallen due for payment to the government given that July payments are due by August 20.
"Ideally, that money should be paid to the State, but then one can challenge the basis of doing so since it would have been collected based on a provision that has been declared null and void.
"We are advising people to comply with the court order but with the caution that these taxes could crystallise down the road should the ruling be in favour of the Treasury," he advised.
[caption caption="President Uhuru Kenyatta signs into law Tax Laws (Amendment) Bill at State House, Nairobi on July 18"]
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