The interventional move by the apex court now grants the government a crucial reprieve, allowing it to continue enforcing the Finance Act 2023 while the legal battle progresses.
The Supreme Court of Kenya on Tuesday, August 20 issued conservatory orders temporarily halting the Court of Appeal’s decision that declared the Finance Act 2023 unconstitutional.
The interventional move by the apex court now grants the government a crucial reprieve, allowing it to continue enforcing the Finance Act 2023 while the legal battle progresses.
Its judges, while issuing the order, considered the uncertainty regarding the revenue-raising measures and the difficulty that may arise in the operations of the two levels of government.
“We are not convinced that the consequences of declaring the entire finance act as unconstitutional would be reversible should the appeal before us be successful,” said the Judges.
The Court of Appeal’s previous judgment, handed down in July, had found that the Finance Act, 2023, contravened Articles 220(1)(a) and 221 of the Kenyan Constitution, as well as sections 37, 39A, and 40 of the Public Finance Management Act (PFMA), which outline the budget-making process.
This ruling sparked widespread uncertainty among employers and taxpayers, who have been grappling with confusion over applicable tax bands and financial regulations.
The Supreme Court’s stay order thus specifically targets Order No.6 from the Court of Appeal, which had provided Kenyans with a temporary relief from the contentious Finance Act 2023. This Order effectively halted the implementation of the Act, leaving a void in the tax landscape as the Finance Bill 2024 was withdrawn and the previous legislation was invalidated.
In addition, the Supreme Court added that public interest tilts in favour of granting the order sought by the National Treasury to maintain stability in the budget and appropriation process pending the determination of the appeal.
