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Alert: Supreme Court Issues Stay Orders on Finance Act 2023
On 20 August 2024, the Supreme Court of Kenya ("SCoK") issued a ruling granting conservatory orders in favour of the government. These orders effectively suspend the Court of Appeal judgment that had invalidated the Finance Act, 2023. The conservatory orders will remain in effect pending the hearing and resolution of the consolidated petitions of appeal.
Court of Appeal Ruling
On 31 July 2024, the Court of Appeal rendered its judgment in the appeal National Assembly V Okiya Omtatah Okoiti and 55 others. The appeal challenged the constitutionality of Finance Act 2023.
In its judgment, the Court of Appeal declared the Finance Act 2023 unconstitutional for the following reasons:
- The National Assembly did not give reasons for rejecting the proposal received from the public during the public participation process.
- The failure to include the estimates of revenue in the Appropriations Bill 2023 and Appropriations Act 2023.
In the absence of a stay from the Supreme Court against the decision of the Court of Appeal, then the government would have been compelled to revert to collecting taxes under the tax regime in place before the enactment of Finance Act 2023.
Supreme Court Ruling
On 20 August 2024, the Supreme Court issued conservatory orders suspending the ruling of the Court of Appeal which declared the Finance Act 2023 unconstitutional. The Court, while issuing the ruling, emphasized that it is guided by the importance of maintaining stability and avoid disruption in public administration. The Apex court declared that public interest tilts in favour of granting the order sought by the Treasury to maintain stability in the budget and appropriation process pending the determination of the appeal.
The Supreme Court has directed that the substantive appeal be heard on a priority basis.
Conclusion
The KRA will continue collecting the taxes enacted by FA2023 pending the determination of the matter by the Supreme Court.
The Supreme Court is scheduled to hear the appeal on 10th and 11th September 2024. A final judgment on the Finance Act, 2023 will be issued following the hearing.