Kenya’s Court of Appeal has upheld a High Court ruling declaring significant portions of the Finance Act 2023 unconstitutional.
The Act, which remains in effect despite the rejection of its successor, was found to have been enacted through a fundamentally flawed process that bypassed essential legislative stages.
The contested sections of the Finance Act introduced amendments to crucial tax laws, including income tax, VAT, excise duty, and regulations governing Special Economic Zones and Export Processing Zones.
“Having found that the process leading to the enactment of the Finance Act, 2023, was fundamentally flawed and in violation of the constitution, sections 30 to 38, 52-63, and 23 to 59 of the Finance Act 2023 stand equally vitiated and therefore unconstitutional,” Justices Kathurima M’inoti, Agnes Murgor and John Mativo said in their judgement.
While the court agreed with the National Assembly and Speaker Moses Wetangula on certain aspects of the appeal, it dismissed their request for tax refunds.
The original lawsuit was filed by a coalition of 56 plaintiffs, including businesses, civil society organizations, and individuals represented by prominent public interest lawyer Okiya Omtatah.
The High Court’s initial ruling had found some sections of the Act constitutional while others were not, leading to multiple appeals and cross-appeals.
In its final determination, the Court of Appeal invalidated specific sections of the Finance Act (30-38, 52-63, and 23-59), declaring them unconstitutional due to the flawed legislative process.
“Accordingly, it is our finding that for purposes of the issues before us, we are satisfied that there exists no live controversy requiring determination by this Court on the question of the unconstitutionality of section 84 of the Act,” they said.
“Failure to comply with this constitutional requirement renders the entire Finance Act,2023 unconstitutional.”
