NOVEMBER 2024 – KENYA
FINANCE ACT 2023 UPDATE
It is important that employers note the following:
Supreme court declares Finance Act 2023 constitutional
On 29 October 2024 the Supreme Court of Kenya issued a ruling in a combined appeal concerning the validity of the Finance Act, 2023. The Court of Appeal’s ruling that the entire Act was invalid was overturned after the judgement considered several concerns pertaining to the legislative process and particular Act clauses. Our CRS News Flash of 12 August 2024 contains more information.
After being ratified on 26 June 2023, the Act was the subject of many constitutional challenges before the High Court (HC). Among other things, the petitioners contended before the HC that the Act needed Senate approval and that the public was not sufficiently involved in its passage. After hearing arguments from both parties, the HC issued its ruling on 28 November 2023, holding that some of the Act’s provisions were unconstitutional, but upholding the others.
After taking power in September 2022, President William Ruto’s administration attempted to enact a fresh round of tax increases this year, which infuriated many citizens and led to violent riots in June and July that claimed over 60 lives.
Shortly after the national legislature ratified this year’s version of the financial law, Ruto was obliged to revoke it due to the disturbance, which also caused a delay in the approval of a fresh funding tranche from the International Monetary Fund.
Ruto has maintained that the tax hikes are required to assist payment of a significant amount of public debt and support development initiatives in Kenya, the largest economy in East Africa.